Why Chasing Volume Hurts Ready Mix Concrete Profit Margins

In ready-mix concrete, chasing more volume might seem like the fastest way to grow revenue. But beneath that logic is a hidden cost that’s often ignored: profit margin erosion.

Consider a familiar scenario. 

A sales rep drops the price by just $1 per cubic yard to win a subdivision pour. Seems harmless, right? But by the time that job is completed, the plant’s trucks have run extra shifts, cash flow is squeezed, and the total profit hasn’t budged; if anything, it’s shrunk.

This blog unpacks the numbers behind that decision and how producers can shift from price-first to margin-first quoting.

The math behind margin erosion

Before we get into strategies, let’s look at the numbers that drive ready mix profitability and how even a small change can lead to margin erosion.

Material (or gross) margin per cubic yard = (Revenue/yd – Material Cost/yd)

This margin is the single most important number for a concrete producer. It’s what’s left to cover fixed costs, profit, and reinvestment after paying for raw materials. Even a small dent in it can quickly scale into a major hit across high volumes.

Here’s a breakdown with an example:

• Average material cost: 45% of revenue
• Operating cost: $48.60/yd
• SG&A: $7.20/yd
• Industry average PBT: $14.59/yd (NRMCA)

Say you’re selling at $160/yd with a cost of $72/yd. That’s an $88 margin, or 55%.

If you drop your price to $159,  your margin also drops to $87. To earn the same $1,000 in profit, you now need to pour more yards.

Read on to understand this in more detail. 

The “$1-drop” formula: Why low-margin jobs are unsustainable

What does a $1 discount actually cost your business? It’s easy to overlook how much impact a small discount has on overall profitability, but it adds up faster than you think.

Here’s the formula to calculate how much extra volume you’ll need to pour just to break even: 

Break-even yards = (Current margin ÷ (Current margin – $1)) × Current volume

Let’s walk through an example:

• You sell 50,000 yards per year
• Your average margin per yard is $88.00
• That gives you a total profit of $4.400 million

Now, drop your price by $1. Your margin becomes $87.00 per yard.

To make the same $4.400 million profit, you now need to deliver 50,575 yards—an increase of 575 yards or 1.15% more volume.

At first glance, 1.15% might not seem like much. But that’s 575 more cubic yards your trucks need to haul, your team needs to batch, and your plant needs to produce, with no increase in profit. 

And that’s assuming all your costs stay flat, which they rarely do.

For producers with thinner starting margins, the volume increase needed is even higher. A lower margin means the cost of discounting compounds even faster.

To avoid this, you might think that adding more volume will solve the problem. But in most cases, that added volume comes with higher costs, tighter cash flow, and capacity strains that erode the very profits you’re trying to preserve. 

Why “we’ll make it up on volume” doesn’t work 

On paper, chasing more work seems like a smart hedge. But in reality, it strains every part of your operation.

• Variable delivery cost crunch: Data shows that operating costs have jumped $4.60/yd since 2018, mostly in delivery: driver wages (+7%), repairs (+16%), tires (+7%). That extra yard you just sold? It’s more expensive to deliver than ever.
  
• Your trucks can’t keep up: In 2023, mixer truck productivity fell to 5,380 yards, down 360 yards from the year before. Even if sales could generate more jobs, it doesn’t mean your fleet can handle the added volume. There’s only so much your trucks, drivers, and plant teams can take on before operational limits are hit.
  
• Cash-flow squeeze: More volume means higher material spend, more fuel, and more payroll, before you get paid. When accounts receivable (AR) take 45–60 days to turn, this can strain your cash flow.
  
• Contribution shrinks: If your marginal delivery cost is $32 and your new margin is $69.68, that means for every additional yard sold, you only keep $37.68 in contribution after delivery costs.
  While that might seem like a solid number in isolation, it’s important to remember that this contribution is spread thin across added volume. And because each new yard carries its own costs—driver time, wear and tear, fuel—it contributes less to your bottom line than you’d expect.
  
• Opportunity cost: Low-margin volume eats up truck time that could go to high-spec or premium work: SCC, night pours, or projects requiring specialty mixes. But when your trucks are tied up on bulk orders with minimal profit, you’re effectively closing the door on higher-value opportunities.
  

Read our blog on Why Undercutting Prices Will Kill the Concrete Industry to understand more about the implications of undercutting your prices. 

If you recognize this pattern in your own business, there are ways to quote smarter and protect your margins. 

How smarter producers protect margins: Construction materials pricing best practices 

The best ready mix companies aren’t winning every job. They’re winning the right ones.

Here’s how they do it:

• They quote from live cost data, not old spreadsheets. Live cost data means every quote reflects the latest material prices, helping sales teams avoid outdated inputs that can quietly erode margin.
  
• They use margin floors and guardrails to stop undercutting. Quotes below minimum thresholds are flagged or routed for approval, ensuring no one wins work at the cost of profitability.
  
• They tie approvals to margin, not just volume. Deals that fall outside target margin bands require review, so teams don’t default to chasing yardage without understanding the financial impact.
  
• They analyze win/loss by mix, customer, and region. Knowing why deals are won or lost helps adjust pricing, prioritize customer types, and refine future bids based on real data, not guesswork.

But they aren’t doing all this manually; they’re using tools built for this kind of work. 

Construction materials pricing software for sustainable building practices: How Slabstack helps

Slabstack is a quoting and CRM platform purpose-built for the construction materials industry. Unlike generic tools, it’s designed around the specific needs of ready mix producers—delivering real-time cost visibility, margin guardrails, and integrated quoting workflows.

With Slabstack, producers get the visibility and control they need to quote fast, without losing margin.

Here’s how we help: 

• Live cost feeds: Your prices update as your inputs change. This ensures that quotes reflect current material, freight, and fuel prices, minimizing surprises and protecting profit.
  
• Margin protection: Helps teams with clear boundaries to quote within and routes risky bids for review, maintaining pricing discipline.
  
• Fast quoting workflows: No more copying numbers across tabs. Sales teams can generate accurate, customized quotes in minutes, even from the field.
  
• Forecasting tools: Understand future demand, seasonality, and regional pricing to plan more strategically. By anticipating demand and setting clear volume and margin goals in advance, sales teams can approach every quote with purpose, not pressure.

In this business, every dollar counts. And dropping your price by one dollar can quickly turn into thousands in lost profit.

Chasing volume might win you more work, but at what cost? The smarter move is to focus on margin: protect it, track it, and quote with confidence.

If you’re ready to move from guessing to knowing, from reactive to proactive, Slabstack can help.

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