Episode 51 - Margin give back on negative variations
In this episode, I'm discussing the importance of understanding how negative variations are treated in your subcontracting agreements.
Many tradespeople are unaware that accepting large deletions of scope can eat into their profit margins if the contract allows builders to recoup money on cancelled work.
I'm also sharing real world examples and guidance on evaluating your contracts to avoid unexpected margin givebacks.
- Check your contract to understand how negative variations and credit calculations impact your profit
- Price each scope item to stand alone to avoid losing profitable work
- Factor in all your business overheads when negotiating your margin percentage
- Consult your accountant to determine your true overhead costs and margin needs
- Don't sign any contract without reviewing the negative variation and credit clauses
For more legal tips and expertise, visit https://www.tricksofyourtrade.com.au/