Construction profit margin calculator
Put in what you are charging and what the job costs. See the gross margin, what survives overhead, and the price below which the job stops paying for itself.
This job
Direct cost
What the job leaves you
- Direct cost
- CA$95,000
- Gross profit
- CA$25,000
- Gross margin
- 20.8%
- Overhead at 12%
- −CA$14,400
- Profit after overhead
- CA$10,600
- Net margin
- 8.8%
Below CA$107,955 this job stops covering its own cost and its share of overhead. You are charging CA$120,000.
You added 26.3% to cost and kept 20.8% of the price. They are not the same number and never will be.
Which costs go where
The split that matters is between cost caused by this job and cost the business carries anyway. Get that wrong and the margin looks better than it is.
Direct cost — caused by this job
Labour hours on this site, materials that go into it, subcontracts you awarded for it, equipment rented for it. If the job had not happened, the cost would not exist.
Overhead — carried whether or not you win it
The office, insurance, the truck, software, accounting, marketing, and your own time when you are running the business rather than building. These do not stop between jobs, which is exactly why every job has to carry a share.
The one that gets missed
Owner labour. An owner-operator who works on site and pays themselves from whatever is left has a direct labour cost they are not counting. Cost your own hours at what you would pay someone else to do that work, or the margin on every job you touch is overstated by the value of your time.
Break-even is the number to remember
It is the price at which the job covers its own cost and its share of overhead and leaves nothing. Below it, winning the work makes the year worse. Knowing that figure before you negotiate is the difference between discounting and giving money away.
Questions
- How do you calculate profit margin on a construction job?
- Gross profit is the price minus your direct cost — labour, materials, subcontracts and equipment. Gross margin is that profit as a percentage of the price, not of the cost. Subtract your overhead allocation and what remains is net profit, which is the number that actually reaches the business.
- What is a good profit margin in construction?
- It depends on the work, the risk and what your overhead actually costs, and any single figure quoted as an industry standard should be treated with suspicion. The more useful question is whether this job clears your own break-even once overhead is covered — which is what the calculator shows you.
- What is the difference between gross and net margin?
- Gross margin is what is left after the direct cost of building the job. Net margin is what is left after your business costs as well — office, insurance, vehicles, software, your own time. A job can carry a healthy gross margin and still lose money once overhead is charged against it.
- How is this different from the markup vs margin calculator?
- That one converts between two percentages: give it a cost and a markup and it tells you the margin. This one takes an actual job — the price and the real cost lines — and tells you what the job leaves you. Use that one while quoting, this one when deciding whether a job is worth taking.
- What overhead percentage should I use?
- Your own. Add up a year of business costs that are not attached to any single job, divide by a year of revenue, and that is your figure. The 12% default here is a placeholder to make the calculator work on arrival, not a recommendation.
- Does this include tax?
- No. Enter the contract price excluding GST, HST, PST or state sales tax. Sales tax is collected on behalf of a government and passes through the business; it is not revenue and including it would overstate every figure here.
Know the margin before you send the quote
BuildersBridge shows the margin on an estimate as you build it, then tracks actual cost against it as the job runs — so the number you quoted and the number you got are in one place.
Related: markup vs margin · budget template · soft costs · overhead guide