The four levers of profit (and how to pull the right one)

If you run a construction business, profit comes from four places: price, volume, cost of delivery, and overhead. That’s it. In a recent episode of The Cost Codes Show, Coltivar founder and construction profitability expert, Steve Coughran, charted them out in plain language and explained how they map to the income statement.

Here’s a simple way to use those levers without getting lost in accounting jargon.

The four levers in plain language

Price

What you bid and bill for the work you put in place. Price is often the most powerful lever. Chasing tiny supplier discounts rarely beats charging correctly for your work.

Volume

How much work you sell and complete. More volume helps only if pricing and execution are solid.

Cost of delivery (cost of goods sold)

Materials, labor efficiency, and subs. Improve labor productivity, choose subs well, and keep an eye on material spend.

Overhead (operating expense)

Everything it takes to run the business: office payroll, sales and marketing, rent, insurance, and supplies.

Don’t pull all four at once

Trying to move every lever at the same time is hard and often counterproductive. A common mistake is to reflexively cut overhead and accidentally remove people who create backlog and revenue.

How to choose the right lever this month

Step 1: look for the gap

Compare your current operating profit to a reasonable target or benchmark. Size the shortfall before you change anything.

Step 2: translate the gap into levers

Decide which lever has the biggest upside. In many cases, a small price improvement moves profit the most.

Step 3: validate with job-level data

Before you accept a giveback or drop price, know your margin floor on that job. Accurate job costing lets you answer with confidence.

Step 4: review the numbers on a cadence

Run a monthly financial strategy review so the team learns to read the story in the financials and pick the right lever next time.

Quick playbook for each lever

If price is the lever

• Tighten estimating and deliver the number with confidence.
• Use professional proposals so scope, terms, and value are clear.

If volume is the lever

• Raise win rate before you chase more bids.
• Shorten turnaround with clean, accurate proposals.

If cost of delivery is the lever

• Confirm production rates with job costing, then feed those lessons back into estimating.
• Track labor, materials, and subs against a budget while work is in progress.

If overhead is the lever

• Cut carefully. Model the impact and avoid hurting sales or delivery capacity.
• Pair reductions with process fixes that don’t harm revenue generation.

Don’t confuse cash with profit

A WIP report shows what you’ve actually earned and whether you’re over- or under-billed. It helps you avoid mistaking unearned cash for profit. Run it monthly.

Where Knowify fits

If you want these levers visible in real time, Knowify ties proposals, budgets, job costing, progress billing, and AIA-style invoicing together so price, cost, and earned revenue stay aligned. That includes a proposal builder with e-signature, plus flexible workflows for fixed-price, time and materials, and AIA-style jobs.

See price, cost, and margin in one place with Knowify. Get started with a free trial today.