Job profit margin calculator
Work out what a job actually left behind — and what it needed to sell for to hit the margin you're aiming at. Adding 20% to your costs is not a 20% margin, and the gap costs more than most tradies think.
Markup and margin are not the same number
This is the single most expensive mistake in trade pricing, and it's an arithmetic one rather than a judgement call. Markup is what you add to your costs. Margin is what you keep out of the price. They only agree at zero.
- A 20% markup on $1,000 of cost gives a $1,200 price and $200 of profit — a 16.7% margin.
- A 50% markup gives $1,500 and $500 — a 33% margin.
- To actually make a 30% margin you need a 43% markup.
The gap widens the higher you go, which is why it bites hardest on the jobs you thought were your best ones. If you've been adding a percentage to cost and calling it your margin, you have been earning less than you think on every job — consistently, and by more each time you push the number up.
What counts as a cost
The margin is only as honest as the costs you put against it, and the two that get left out are the two that matter.
- Your own hours count. If you worked on the job, the business owes you for that time at what an hour costs it — not at nothing because you're the owner. A job that only makes money when you don't pay yourself isn't making money. The charge-out rate calculator works out what your hour costs.
- On-costs count. A wage is not what an employee costs. Leave, public holidays, retirement contributions and insurance sit on top, and a job costed at the bare hourly wage is understating its labour by a fifth or more.
Overheads that aren't job-specific — the van, the phone, the accountant — don't belong here. They come out of the margin across all your jobs, which is what makes the target margin a target rather than a profit.