Materials share

Definition

Supplies and materials as a percentage of receipts, which the federal file publishes for the trade.

Why It Matters

The class average is about thirty-seven percent, and payroll takes another thirty, so two thirds of revenue is committed before rent, machines or the owner. That ratio is the fastest read on whether a shop is priced properly: materially above the class average means either the quote book is stale or the scrap rate is high, and materially below usually means the work is labor-heavy and not material-heavy, which is a different business with a different risk. Compute it from the seller's own purchases, not from the tax return line.