The average job makes 40%. Almost none of them do.

A blended gross margin can be perfectly accurate and still describe a business that does not exist. What matters is the spread underneath it.

By Steve 5 min read
Abstract bridge artwork for The average job makes 40%. Almost none of them do.

Two firms report a 40% gross margin. In the first, nearly every job lands between 35% and 45%. In the second, the spread runs from minus 15% to plus 70%, and the average is simply where the arithmetic happens to fall. In the management accounts they are indistinguishable. As businesses they have almost nothing in common, and the second one has a problem the first does not: a portion of its work is being subsidised by the rest, quietly, every month, by people who have no idea it is happening.…

Keep reading for free

Create an account to read the rest.

The whole library is free. No card, no subscription, no trial that quietly ends. An account simply lets us know who we are writing for, and opens every article from here on.

  • Every article, in full, at no cost
  • New articles published every weekday
  • Takes about twenty seconds
Create a free account I already have one

Free means free. We will not charge you for the library, and you can read as much of it as you like.

Important: General information only. Rialto Bridge articles describe patterns and considerations that may apply to a business; they are not financial, legal, tax or accounting advice, and they take no account of your particular circumstances. Consider your own situation and seek advice from a qualified professional before acting.

More on Pricing

Scroll to Top