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.
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.
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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