Free Profit Margin Calculator
for Contractors

How to use the margin calculator

1. 1

   Add your costs

   Enter what the job costs you: labor, materials, and any subs, permits or fees.

2. 2

   Enter the margin you want

   Type the share of the price you want to keep. If you've already got a price in mind, switch to Price to see the margin it gives you.

3. 3

   Quote that price

   You get the price to charge, your profit, and the markup it takes to get there.

The profit margin formula

Margin is the share of the price you keep after the job's costs:

So a $2,000 job at a 30% margin is priced at $2,000 ÷ 0.70 = $2,857.14. That leaves $857.14, which is 30% of the price.

The mistake to watch for is multiplying your cost by 1.30 instead. That gives you $2,600 and a 23.1% margin, which is the difference between markup and margin in one line.

Margin to markup chart

The markup to put on your cost to reach each margin:

What is a good profit margin for a contractor?

As a rule of thumb, trades businesses often need a gross margin of 30–50% on quoted work to cover overhead and still make a profit. Where you land depends on your trade, your overhead and the type of work: emergency service calls can usually carry more than large competitive bids.

A number from a rule of thumb is only a starting point, though. Add up a year of overhead, divide it by a year of revenue, and that's the share of every job that's already spoken for. Your target margin needs to be that plus the profit you want. There's more detail in what counts as a good profit margin for contractors.

Gross margin and net margin

This calculator shows gross margin, which is the job's price less the job's direct costs. Net margin is what's left once the rest of the business has been paid for as well: vehicles, insurance, tools, office and your own unbilled time.

That's why a job can look healthy at 25% gross and still lose money. If your overhead takes 20% of revenue, there's only 5% left, and one callback can use that up.

Know the margin before the quote goes out

Most contractors find out what they made on a job after it's over, when it's too late to change the price. It's much easier to fix before the customer has seen it. The free quote generator shows your margin on a full quote as you build it, with your costs kept off the PDF. For more on setting prices, see the guide to pricing contractor jobs.

Questions

• How do I calculate profit margin on a job?
  Subtract your cost from the price, divide by the price, and multiply by 100. A job that costs $2,000 and sells for $2,857.14 has a margin of $857.14 ÷ $2,857.14 × 100 = 30%.
• How do I price a job for a 30% margin?
  Divide your cost by 0.70. A $2,000 job needs a price of $2,857.14. For any other margin, divide by 1 minus the margin as a decimal: for 40%, divide by 0.60.
• What markup gives a 30% margin?
  A markup of 42.9%. The formula is markup = margin ÷ (100 − margin) × 100, so 30 ÷ 70 × 100 = 42.9.
• Does this include overhead?
  Only if you enter it. The calculator works from the costs you put in, so the result is your gross margin. Overhead you haven't included still has to come out of the profit it shows.
• Is the calculator free? Are my numbers saved?
  It's free and doesn't need an account. Everything is worked out in your browser, and your numbers aren't saved or sent anywhere.