Last week I watched a Leave It To Beaver rerun on TV. The Beaver was asking Wally to explain his algebra homework. “It’s just arithmetic where you learn what x and y mean.” “What do they mean?” asked The Beaver. “I don’t know yet,” said Wally. “That’s why I’m taking algebra.”
Unfortunately we have a lot of contractors and far more ex-contractors who never learned what the formula, x - y = P, meant in their businesses. X and y can represent any factor. Let x = your estimate and y = your costs for performing a contract. Naturally, x must be greater than y or you are not going to survive. The P in my formula always stands for profit, which is why I use a capital P.