BuildWellProfit margin
Profit margin is profit expressed as a percentage of the selling price, showing how much of each dollar of revenue the business keeps.
The formula is (price − cost) ÷ price. A job sold for $12,500 that costs $10,000 has a $2,500 profit and a 20% margin.
Gross margin uses only the job’s direct costs: labor, materials, equipment and subs. Net margin subtracts overhead too, such as insurance, vehicles, office costs and salaries not charged to jobs. Gross margin on each job has to be large enough to cover overhead and still leave a net profit.
To price for a target margin, divide cost by (1 − margin). For a 30% margin on a job that costs $10,000: $10,000 ÷ 0.70 = $14,286. Adding 30% to cost gives only $13,000, which is a 23% margin.
Compare actual margin with estimated margin on every finished job. When they drift apart, the cause is usually in the estimate (missed items, low labor hours), in changes that weren’t billed, or in callbacks. Job costing is how you find out which.
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- AI estimates priced for your area
- Estimates, invoices, clients and projects
- Clients sign on any phone
- Card and bank payments, no extra BuildWell fee
- iPhone, Android and the web
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