You can't spend a percentage.
How GP/Day turns your attention to your company's throughput.
The GP/Day Deep Dive: 10 Ways to Rethink Profitability
In my recent Journal of Light Construction article, I discussed Gross Profit per Day (GP/Day) as a way to determine how much gross profit in dollars your company needs to earn per project. GP/Day also measures how efficiently your company earns profit. In this post I offer some additional thoughts on how to use GP/Day as a lens to change how you look at jobs, schedules, and maybe your business model.
Why Percentages Mislead
Most contractors are trained to think in terms of gross margin percentage. A 30% or 35% markup feels like a safe, consistent answer to “What should I charge?” But what does that percentage yield in real dollars?
Take two projects:
Project A – $250,000 contract at 35% gross margin = $87,500 gross profit. Duration: 110 days. GP/Day = $795. This contract amount and duration is typical of an addition project.
Project B – $180,000 contract at 32% gross margin = $57,600 gross profit. Duration: 60 days. GP/Day = $960. This contract amount and duration is typical of a large kitchen remodel project.
On paper, Project A looks stronger project because it has a higher margin and more total dollars. But Project B produces it’s gross profit faster. In terms of throughput, think dollars returned by your direct labor over time, Project B is the stronger project.
This matters because overhead and payroll don’t care about percentages. They’re paid in cash, week by week. A job with a solid margin can still sink your company if it ties up your team too long without generating enough daily profit. GP/Day cuts through that illusion.
When you start comparing projects on GP/Day instead of percentages, you may discover that your “best” jobs aren’t the ones you thought they were. It’s a simple shift in perspective that changes how you bid, schedule, and even decide which work is worth taking on.
Here are ten additional ways GP/Day can inform your day to day thinking.
1. GP/Day as a Lens on Time
Time is the one resource you never get back. As we saw in the example above, GP/Day reframes profitability not as a margin percentage, but as throughput. It asks: How much profit do we produce each day our team is on the clock?
2. Why Percentages Mislead
Two jobs can both hit a 35% gross margin and still produce wildly different financial results once time is factored in. GP/Day exposes that difference, making sure your “profitable” jobs aren’t secretly draining resources.
3. Linking the Company Budget to the Day to Day
Your company budget sets the annual gross profit target: Net Profit + Operating Expenses = Gross Profit. Divide that by the number of working days in the year, and you have your daily GP requirement. Now the budget becomes a real-world benchmark.
4. Crew Capacity and GP/Day
Labor is the limiting factor. Whether you self-perform carpentry or manage subs, your crew can only deliver so much per day. GP/Day ties their output directly to the company’s financial needs, making labor productivity measurable in dollars.
5. The Opportunity Cost of Slow Jobs
Jobs with low GP/Day don’t just miss the mark—they block better work from entering your pipeline. GP/Day forces you to ask: Is this project worth the time it consumes?
6. Forecasting with GP/Day
Use GP/Day to project cash flow. Look at your backlog, apply GP/Day targets, and you can spot months in advance when cash will dip—or surge.
7. Change Orders and GP/Day
Change orders are often celebrated as “extra profit,” but GP/Day reveals when they’re actually eroding performance by extending the schedule without adding enough dollars.
8. Comparing Project Types
Use GP/Day to evaluate which project types (kitchens, baths, additions, whole-house remodels) truly support your company. Some scopes will consistently outperform others—knowing which is which can guide sales strategy.
9. Motivating Teams with GP/Day
Margins and markups can feel abstract. But telling a crew, “We need to hit $700 a day in gross profit” is concrete. GP/Day is a way to make financial performance visible to the people building the work.
10. The Strategic Layer: Dashboards and Growth
The endgame is bigger than any one job. GP/Day is the foundation for dashboards, backlog analysis, and multi-year forecasting. With it, you can preview next year’s profit needs before the first contract is signed.
Try This in Your Own Business
I’d love to hear how GP/Day looks in your world. Here are a few ways to test it:
Pick one job you recently completed. Run the numbers: (Revenue – Job Costs) ÷ Calendar Days = GP/Day. Did the result surprise you?
Compare two different project types you build regularly—say, a bath vs. a deck, or a kitchen vs. an addition. Which has the stronger GP/Day?
Think about your backlog: if every job you have booked this year delivered your target GP/Day, would you hit your annual profit goal?