Ask most flooring owners what their margin is and they'll tell you the number off the bid. "We run 35, 40 on retail." And on the bid, that's true. The problem is the bid isn't where you make money. The install is.
There are two margins on every job, and confusing them is one of the most expensive mistakes in this business.
The two numbers
Sold margin is what you quoted. It's the margin baked into the bid the day the customer signed. Clean, optimistic, calculated before a single box of material left the warehouse.
Produced margin is what you actually kept after the job was done — after the real labor hours, the real material including waste and reorders, the change order you forgot to bill, the freight, and the go-back you drove back out for.
Sold margin is a promise. Produced margin is the receipt.
Why the gap exists
If sold and produced always matched, you wouldn't need two numbers. They don't match because reality charges fees the bid never saw:
- The takeoff missed cut waste, so you bought more material than you billed.
- The crew sat half a day waiting on the GC — paid hours, zero revenue.
- A change order got handled in the field and never made it onto an invoice.
- A seam lifted three weeks later and someone drove back out for free.
Every one of those comes out of produced margin and never touches sold margin. So the bid still says 38% forever, while the job actually finished at 26%. (I broke down each of these leaks in this post if you want the long version.)
Why only tracking sold margin burns you
Here's the trap. You look at your bids, you see healthy margins, and you assume the business is healthy. Then the bank account doesn't agree, and you can't figure out why, because every job "made money" on paper.
It's like checking the menu price and never reading the receipt. You feel rich until the statement comes.
The shops that grow profitably aren't the ones with the highest sold margins. They're the ones whose produced margin is close to their sold margin — because that gap is pure, recoverable money.
How to actually track produced margin
You don't need to overhaul your whole operation. You need to capture four things against each job as it happens:
- Real labor cost — actual hours and idle time, not the estimate.
- Real material cost — including waste, reorders, and rush freight.
- Change orders — every dollar of extra field work, billed.
- Go-backs and rework — labor, material, and drive time on returns.
Subtract all of that from what the customer actually paid, and that's your produced margin. Put it next to your sold margin and you've got the single most useful number in your business: the gap. Watch the gap. Shrink the gap.
This is the whole reason produced gross margin tracking exists, and it's baked into how FloorStrategy handles jobs — sold and produced sitting side by side, per job and per month, instead of one optimistic number you have to take on faith.
The mindset shift
Stop asking "what did we bid this at?" Start asking "what did we keep?"
The first question makes you feel good. The second one makes you money. The owners who internalize that — who treat the bid as a forecast and the produced number as the truth — are the ones who stop wondering where the profit went.
Want to see sold vs. produced margin on every job automatically? That's the core of FloorStrategy — free until July 22.
FAQ
What's the difference between sold and produced margin in plain terms? Sold margin is what you quoted. Produced margin is what you actually kept after labor, waste, change orders, and go-backs. One's a promise, the other's the result.
Which one should I be managing to? Both — but the number that tells you the truth is produced margin. Sold margin tells you what you hoped for. Produced margin tells you what happened.
My sold margin looks fine. Why should I care about produced? Because a great sold margin with a big gap underneath it is a business that feels profitable and isn't. The gap is where your real money is going, and you can't recover it if you never measure it.