# Materials share

A term used when buying machine shop.

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

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. 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.

Part of: Buying a Machine Shop (https://searchspheresource.com/guides/buying-a-machine-shop)

Source: https://searchspheresource.com/guides/buying-a-machine-shop/terms/materials-share
Not dated: The same editorial definitions as the glossary, inside a trade.

Site index for machines: https://searchspheresource.com/llms.txt