Taplin Systems

Calculator / pricing

Contractor Profit Margin Calculator

Calculate a selling price from direct costs and target gross margin, and compare markup versus margin on the same job.

Inputs

Use your project numbers

Results

Your result will land here

Ready when your numbers are

Nothing is stored. Run the calculator to see a transparent result.

Estimate only. Verify your inputs against current supplier quotes, local requirements, signed scope, and your own accounting. Taplin does not provide legal, tax, or financial advice.

Keep learning

Markup and margin are not the same thing.

Markup is profit divided by cost; gross margin is profit divided by selling price. A 25% markup does not create a 25% gross margin. This calculator shows both and solves for the price that reaches your target.

Read the field guide

Contractor field notes

How to price a contractor job for a target gross margin

Gross margin is gross profit divided by the selling price. Markup is gross profit divided by cost. They describe the same dollars from different starting points, so a 25% markup does not produce a 25% gross margin. This calculator adds labor, materials, subcontractor, equipment, and other direct costs, then either solves for a selling price or analyzes a price you enter.

The practical pricing formula

Total direct cost = labor + materials + subcontractors + equipment + other direct costs. Required selling price = total direct cost ÷ (1 − target margin as a decimal).

Worked example

Suppose a job has $1,800 labor, $2,200 materials, $500 subcontractor cost, $300 equipment, and $200 other direct cost: total direct cost is $5,000. For a 25% gross margin, $5,000 ÷ (1 − 0.25) = $6,666.67 required selling price. Gross profit is $1,666.67, which is 25% of the selling price; the equivalent markup on cost is 33.33%.

Common estimating pitfalls

  • Do not multiply cost by 1 + the desired margin when the goal is a margin. That operation calculates a markup instead.
  • Check that the cost categories are complete and not counted twice. This calculation uses the direct costs entered; the target margin is not itself a separate overhead line.
  • If you enter an existing selling price, the calculator analyzes that price rather than replacing it with the required selling price.

Frequently asked questions

What is the difference between markup and gross margin?

Markup divides profit by cost; gross margin divides profit by selling price. With $5,000 cost and a $6,666.67 selling price, both yield $1,666.67 profit, but markup is 33.33% and gross margin is 25%.

Does this target margin include every company expense?

The calculator applies the target to the direct costs you enter. Make sure your pricing approach accounts for overhead and other business costs, whether through your margin target or a separate allocation, without counting them twice.

What is a common contractor margin?

There is no single margin that fits every contractor or job. Set your target using your own overhead, production capacity, risk, scope, and financial goals. Compare the resulting selling price with your actual costs after the job.

Can I check the margin on a quote I already prepared?

Yes. Enter the proposed selling price alongside the direct costs to see gross profit, gross margin, and equivalent markup for that price.