Free Contractor Tool
Contractor Profit Margin Calculator
Enter materials, labor, and overhead — get the right selling price to hit your target gross margin, plus your actual gross and net profit for each job.
Build Proposals That Reflect Your Real Margins
Calculate Your Job Price & Profit
Enter your actual job costs and target margin. The suggested price and profit figures update instantly.
Suggested price
$15,455
Gross profit
$8,455
Net profit
$6,955
Direct costs
$7,000
Gross margin
54.7%
Net margin
45.0%
Markup on cost
81.8%
Gross profit = revenue minus direct costs (materials + labor). Net profit = revenue minus all costs including overhead. Always confirm actual overhead allocation per job based on your monthly overhead and volume.
Ballpark estimate only
These figures are rough estimates for planning purposes only. Actual results will vary based on your specific situation, local market conditions, and contractor pricing. Do not use these estimates for budgeting, contracts, or financial decisions without first obtaining written quotes from licensed professionals.
📋 Important: All calculator results are ballpark estimates
The figures shown are approximate estimates based on typical averages and should be used for general planning purposes only. They are not a substitute for a professional assessment or written contractor quote. Actual costs, savings, and results will vary significantly based on your specific circumstances, local market conditions, equipment choices, and contractor pricing. Always confirm any estimate with a licensed contractor, financial advisor, or qualified professional before making purchasing or financial decisions.
Margin vs. Markup: Why It Matters
The mistake most contractors make
Most contractors learn to price by adding a percentage on top of their costs. "My costs are $8,000, I'll add 45% profit — so I'll charge $11,600." That sounds like a 45% margin, but it's actually a 31% margin. The difference: markup is calculated on cost, margin is calculated on revenue. A 45% markup on $8,000 = $11,600 at a 31% margin. To hit a 45% margin, you need a 82% markup — meaning you'd charge $14,545.
The correct formula
Selling Price = Total Costs ÷ (1 − Target Margin). If your all-in costs are $10,000 and you want 45% gross margin: $10,000 ÷ 0.55 = $18,182. This calculator does that math for you — just enter your costs and target margin.
What margin should I target?
Industry benchmarks for residential specialty contractors:
Common Questions About Contractor Margins
What is a good profit margin for contractors?
Most residential specialty contractors target a gross margin of 40–55% and a net margin of 10–20% after overhead. Roofing contractors typically run 40–50% gross margins. HVAC installation contractors run 45–55%. Solar installers vary widely (30–55%) depending on product margins and financing structures. If your gross margin is below 35%, you likely have a pricing, materials, or labor efficiency problem. If net margin is below 10%, overhead costs need review.
What is the difference between markup and margin?
Markup is calculated on cost: a 100% markup on $5,000 in costs = $10,000 selling price. Margin is calculated on revenue: that same job has a 50% gross margin ($5,000 profit / $10,000 revenue). This is a critical distinction — many contractors confuse the two and underprice their work. To convert: Margin = Markup / (1 + Markup). For a 50% margin, you need a 100% markup on your direct costs.
What should I include in overhead costs?
Overhead includes all costs that aren't directly tied to a specific job: office rent, utilities, insurance (general liability, workers' comp, vehicle), vehicle payments and maintenance, software subscriptions, marketing spend, administrative salaries, and owner's draw or salary. A healthy overhead target for a $1–5M contractor is 20–30% of revenue. Divide your monthly overhead by your average monthly revenue to find your overhead percentage, then build it into every job's pricing.
How do I price a job to hit my target margin?
The formula is: Selling Price = Direct Costs / (1 − Target Gross Margin). For example, if your direct costs are $8,000 and you want a 45% gross margin: $8,000 / (1 − 0.45) = $14,545. Many contractors make the mistake of adding their desired profit ON TOP of costs (markup method), which always produces a lower margin than intended. Use the margin formula to price correctly every time.
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