Contractor Profit Calculator : Margin vs Markup and Breakeven Price

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Determine required contract bid prices, overhead recovery, gross margin, net profit margin, and the mathematical difference between markup and margin.

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Contractor Profit Calculator

Professional contractor estimation, tracking and commercial tools

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Contractor Tip: Margin vs. Markup Formula Rule

Markup is calculated on cost: (Price - Cost) / Cost. Margin is calculated on contract revenue: (Price - Cost) / Price. For example, achieving a 15% net margin on sales requires a 17.6% markup on total cost!

Cost Thresholds

Direct Job Cost:$150,000
Overhead Allocation (12%):$18,000
Breakeven Bid Threshold:$168,000

Profit Return

Gross Profit (Price - Direct):$47,647.06
Gross Margin %:24.1%
Net Profit (After Overhead):$29,647.06
Target Bid / Contract Price
$197,647.06
Net Profit Margin: 15.0% on Contract Price
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Steg-for-steg-guide

1

Input Direct Job Costs

Enter combined direct costs for materials, labor, subcontractors, and equipment.

2

Enter Company Overhead Rate

Input your annual operating overhead percentage to find the breakeven threshold.

3

Choose Target Margin or Markup

Select whether you want a target profit margin on total revenue or a markup on direct cost.

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Markup is the percentage added on top of cost: (Price - Cost) / Cost. Margin is the percentage of final revenue that is profit: (Price - Cost) / Price.
A 20% markup on a 100 dollar cost produces a 120 dollar price, yielding a 16.7% profit margin. To achieve a true 20% margin, you need a 25% markup.
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