Contractor Margin Calculator
Work backwards: enter the price you're about to quote and what the job costs you, and see the margin and markup you'd actually be locking in — before the client ever sees the number.
Margin = (Price − Cost) ÷ Price($2,600.00 − $1,950.00) ÷ $2,600.00 = 25.0%Electrical: where the number comes from
An electrician is about to send a $2,600 quote for a residential panel upgrade and wants to check what margin it actually carries.
| Input | Value |
|---|---|
| Job price | $2,600 |
| Total job cost | $1,950 (labor, permit, materials) |
Result: 25% margin — $650 gross profit toward overhead and net income
If overhead runs ~15% of revenue, this job contributes about 10 points toward net profit. The electrician also checks the target-margin panel: pricing the same job to a 30% margin would require $2,785.71.
Load this example into the calculatorThe calculation
| Gross profit | $2,600 − $1,950 = $650.00 |
| Gross margin | $650 ÷ $2,600 = 25.0% |
| Markup | $650 ÷ $1,950 = 33.3% |
How this calculator works
Every result comes from the formulas below — the math shown is the math used. Change any input and results update instantly in your browser; nothing is sent to a server.
- Gross margin:
Margin % = (Price − Cost) ÷ Price × 100 - Markup (equivalent):
Markup % = (Price − Cost) ÷ Cost × 100 - Implied price for a target margin:
Price = Cost ÷ (1 − Margin ÷ 100)This is the formula to use when your profit goal is stated as a margin.
What the result means
The margin is the share of the selling price left after direct costs — the pool that pays overhead before anything becomes net profit. The equivalent markup shows the same profit measured against cost, which is why it's always the bigger number.
When to use it
Use it to sanity-check a quote before sending it, or to back into the right price from a margin goal.
Common mistakes
- Pricing to a margin by multiplying — Cost × (1 + margin) understates the price; divide instead.
- Reading the margin off a bid without checking what overhead comes out of it first.
Frequently asked questions
How do I calculate margin on a job?
Subtract the job's total cost from the price, then divide by the price. For example, a $2,000 job that costs $1,500 has a margin of ($2,000 − $1,500) ÷ $2,000 = 25%. That $500 of gross profit then has to cover overhead before anything is left as net profit.
What gross margin should a contractor aim for?
Residential trades commonly target gross margins in the 25–50% range depending on trade and business model, while tighter-margin commercial work often runs much lower. The useful benchmark is your own overhead as a percentage of revenue plus your target net profit: gross margin must exceed that sum or the business loses money on every job.
Building the price up from costs instead of checking one you've quoted?
Apply a markup to your costs →Related tools and guides
Contractor Margin Calculator is part of RateCraft, a set of free pricing and estimating tools for contractors and service businesses. Results are calculated entirely in your browser and are estimates for planning purposes — see our disclaimer and methodology.