In the moving industry, 7% is widely considered the average profit margin. But 20% or more is not only attainable, it’s also what you should be striving for.
Because if you’re like most movers, you got into this business for two reasons: 1.) you love moving and 2.) you want to make money to support your goals and lifestyle.
The truth is, your target margin is always going to vary based on your growth goals and market. However, there are a few best practices today’s top movers are tapping into in order to 2x, 4x, or even 6x their profits. Today, we’re sharing a simple formula to calculate your profit margin, plus proven strategies to help you reach peak profitability.
If you run a Google search for ‘What’s a good average profit margin for movers?’, you’ll find an overwhelming range of answers.
But if you ask an actual moving business owner with decades experience under their belt, they’ll tell you that a 7% profit margin is widely considered the industry benchmark. At the end of the day, that’s not terrible. But you could be doing a lot better.
Today, movers like 2 College Brothers, Local Muscle Movers, and Wildcat Movers are leveraging technology to optimize their marketing, sales, and operations and reach new levels of profitability. And with the right strategies, you can too.
To calculate the net profit margin for your moving company, use the following formula:
⚡Net Profit Margin = (Net Income / Total Revenue) x 100
Net Income: This is the total income your company has earned after deducting all expenses, including labor, operating costs, taxes, and more.
Total Revenue: This is the total amount of money your company has generated from all offered services.
By plugging in the values for net income and total revenue into the formula above, you can calculate your company's net profit margin as a percentage for a clear idea of your profitability after considering all income and expenses.
Here are some of the different types of income sources you could include:
And here are some of the monthly expenses to account for:
| 👉 Are there issues in your business that you just can’t see? Get instant insights into your P&L statements from one central system. Demo SmartMoving today for a live look at our best-in-class profitability reporting. |
Before you can get where you’re going, you’ve got to know where you stand. Whether you’re currently tracking at 7% profitability or even 10-12%, the following strategies will help you scale your profits.
Whether you use Excel, Quickbooks, or a dedicated moving system like SmartMoving to run your accounting, make sure you’re adding all income and expenses to your profit and loss (P&L) statement.
Once you’re confident all the right items are included, take a detailed look at your P&L to make sure everything is classified correctly. At the end of each section, add a field for percentage of income from each revenue source: long distance moves, local moves, storage, etc.
Next, set achievable profit targets for each type of move and/or revenue line. Then, do the same for your expenses. For example, if your total income was $100,000 and you spent $10,000 on marketing you’d have a percentage of 10% in the Marketing category of your P&L. From here, you can work to optimize your marketing spend to secure a better ROI on those investments.
Common expense targets for other items include:
With easily scannable percentages for each area of the business, you’ll be able to quickly identify anything that looks off.
You can waste a lot of time (and money) chasing unprofitable moving jobs. But if you’re only checking your P&L once a month, by the time you notice these mistakes it’s too late to do anything about them.
Once you’ve dialed in your P&L, focus on the types of moves that are generating the most revenue relative to expenses and coach your team to identify and book profitable jobs. At the end of the week, review the new jobs booked. If a job is booked at a rate that’s too low, address the issue with your sales team before it escalates.
“Before, we would do jobs that were fundamentally unprofitable because of the volume they would bring in. But on some of them we were just flat out losing money. Now, we can catch that in real time,” says Wade Swikle, founder and CEO at 2 College Brothers.
If you’re already using an all-in-one system like SmartMoving, you can set up automatic expenses, revenue calculations, and real-time monitoring to actively track your profitability on a job-by-job basis.
With so many lead providers to choose from, it can be hard to know where you and your sales team should focus your efforts.
Fortunately, the right reporting tools make it easy to figure out which marketing strategies and lead sources are giving you the best ROI so you can increase your investment in those channels.
To start, take a good look at your cost per lead, percent of revenue spent, and acquisition cost for each of your top lead sources.
Experts like Zane Ponsetti, Owner of Wildcat Movers, regularly track the “profitability killers” in each area of the business. “In marketing, I try to get a 4 or 5x return,” he explains. If he doesn’t see the return he wants from a given marketing source, he cuts it from the mix and focuses only on his best channels.
Did you know that more than half of moving company entrepreneurs still struggle to execute and optimize their sales? Many still fail to make more than three follow ups with incoming leads. That simply isn’t enough to move the needle.
Here are a few tips to help you and your team maintain momentum with your follow ups:
“SmartMoving gives us a timeline of every piece of correspondence and so much more consistency. Before SmartMoving, we had 60-90 jobs completed. With SmartMoving, we have 179 jobs completed," says Michael Bensur, General Manager at Local Muscle Movers.
With a streamlined system for all things sales, Michael and his team have secured a 51% increase in revenue and a 6.5X increase in profits.
A classic way to improve your bottom line is to revisit your pricing structure. In fact, more than half of moving companies plan to raise prices by around 5% and 61% of best-in-class movers have done so already.
But when it comes to updating your pricing strategy, there are multiple different ways to go about it.
For example, you could use an intelligent pricing engine to increase prices when demand is high and establish a system where you automatically charge more for last-minute bookings. Or you might choose to raise your prices across the board, adjust your marketing and advertising to target upmarket customers, and make more on fewer moves.
If you’re already using an all-in-one moving company software like SmartMoving, you can even set up your system to automatically limit online bookings during busy seasons, so you can prioritize higher-margin jobs.
The strategy you choose will all depend on various factors, including your specific goals and market. Just make sure you have a system in place that gives you full visibility into how your profitability is tracking, changing, and ultimately, growing.
Scaling a moving company successfully means keeping a close eye on your profits.
With systems in place to track and optimize your profitability, you can level up your core operations and grow your margins. And technologies like SmartMoving are here to help.
SmartMoving’s built-in reporting helps movers understand and improve their numbers, with real-time insights into your:
Join our mission to help movers build profitable businesses that never settle for average. Subscribe to our blog and get actionable insights delivered straight to your inbox. Or book your demo today to learn how movers are making 20% net profit or more with help from SmartMoving’s all-in-one moving company software.