Profit margin calculator for contractors
Your profit margin is the share of the selling price left once every cost is paid. Enter your direct cost, overhead and target margin to get the price, the multiplier and the markup, or check a price you already quote.
Free calculator, no sign-up.
From cost to selling price
Materials + labour
Insurance, tools, vehicle, office
Share of the selling price you keep
- Selling price
- $1,714.29
- Net profit: $514.29
- Multiplier
- 1.71
- Markup
- 42.9%
- Profit margin: 30%
- Cost of goods sold$1,000.00
- Overhead$200.00
- Net profit$514.29
Estimate, before tax. The multiplier is the selling price divided by your direct cost (by the total cost in the second mode).
From direct cost to price, in four steps
A price is built from the bottom up. Skip a step and it comes out of your margin.
Direct cost
Materials, labour (your hours at your hourly cost) and equipment for the job, before tax.
+ overhead
Insurance, van, phone, accountant, premises. As a percentage of direct cost, from last year's figures.
= total cost
What the job really costs you. Price below it and you work at a loss.
+ margin = selling price
The multiplier sums it up: selling price divided by direct cost.
The multiplier, worked through
Multiplier = selling price divided by direct cost. It folds overhead and margin into one number you apply to every quote.
1,200 ÷ (1 − 30%) = 1,714.29- Direct cost
- $1,000.00
- Overhead (20%)
- $200.00
- Total cost
- $1,200.00
- Profit
- $514.29
- Selling price
- $1,714.29
- Multiplier
- 1.71
Why not 1,200 × 1.30?
Because a 30% markup on cost only leaves a 23.1% margin on the price. If you want to keep 30% of the price, divide by 0.70 rather than multiply by 1.30.
Markup vs margin
The same profit gives two different percentages. Markup is measured on cost, margin on the selling price.
| Markup | Margin | Multiplier on total cost |
|---|---|---|
| Markup10% | Margin9.1% | Multiplier on total cost1.10 |
| Markup20% | Margin16.7% | Multiplier on total cost1.20 |
| Markup30% | Margin23.1% | Multiplier on total cost1.30 |
| Markup50% | Margin33.3% | Multiplier on total cost1.50 |
| Markup80% | Margin44.4% | Multiplier on total cost1.80 |
| Markup100% | Margin50% | Multiplier on total cost2.00 |
Your margin, on every quote
Describe the job by voice and Donizo writes the quote in 2 minutes, at your prices.
Frequently asked questions
Markup, margin and the multiplier: the short answers.
Margin = (price minus total cost) divided by price. On a 1,714.29 price with a 1,200 total cost, that is 514.29 of profit, a 30% margin. The calculator works it out both ways.
Markup is profit as a share of cost; margin is profit as a share of the selling price. A 50% markup is only a 33.3% margin. Mixing them up is the quickest way to underprice a job.
Multiplier = (1 + overhead) divided by (1 minus target margin). With 20% overhead and a 30% margin: 1.20 ÷ 0.70 = 1.71. Work it out from your own figures rather than copying someone else's.
No. Markup sets the price; profit is what is left after every cost. A high markup with high overhead can still leave a thin profit, so always check the margin.
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