Your numbers
$
Everything you billed.
$
Labor, material, subs, permits, job fuel.
$
Everything else, your own pay included.
%
12% is the bottom of healthy.
It opens with example figures from a $1.2M residential GC so you can see how it behaves. Replace them with yours.
Where you are now
Gross margin
—
Net margin
—
Burden rate
—
overhead per $1 of direct cost
Markup in use
—
—
What your target requires
Markup needed
—
on direct cost
Price change
—
across the same work
Revenue would be
—
Net profit would be
—
Price your next job
$
| Direct cost | — |
| Overhead burden | — |
| What the job costs your business | — |
| Price to quote | — |
| Net profit on this job | — |
| Markup this represents | — |
| What your current markup would have quoted | — |
If raising prices costs you work
%
Revenue
—
at the new price, fewer jobs
Net profit
—
Overhead is held constant, because it doesn't fall when you take less work. Which is exactly why losing a job at a proper price usually beats winning it at a bad one.
Direct or overhead?
If the cost disappears when the job disappears, it's direct. If you'd still owe it next month with no work on the books, it's overhead. Getting this split wrong is how burden rates go wrong.
| Direct job cost | Overhead | Pick one and stay consistent |
|---|---|---|
| Crew wages on the job Materials Subcontractors Permits & inspection fees Dumpster, portable toilet Equipment rented for the job Job-specific fuel Builder's risk on that project |
Your salary or draw Office rent or home-office share General liability insurance Truck payments & insurance Phones, internet, software Bookkeeper & CPA Marketing & website Small tools & consumables |
Superintendent or PM salary — direct if you can assign their hours to jobs, overhead if you can't Owned equipment — usually overhead, unless you charge jobs an internal rental rate Warranty & callback work — most builders reserve a percentage against revenue instead |
Markup / margin conversion
Left to right: the margin you want and the markup that produces it. Right to left: the markup you've been using and the margin it's actually been giving you.
| Margin you keep | Markup required | On a $100,000 cost |
|---|---|---|
| 5% | 5.3% | $105,263 |
| 10% | 11.1% | $111,111 |
| 12% | 13.6% | $113,636 |
| 15% | 17.6% | $117,647 |
| 20% | 25.0% | $125,000 |
| 25% | 33.3% | $133,333 |
| 30% | 42.9% | $142,857 |
| 35% | 53.8% | $153,846 |
| 40% | 66.7% | $166,667 |
| 45% | 81.8% | $181,818 |
| 50% | 100.0% | $200,000 |
markup = margin ÷ (1 − margin) · margin = markup ÷ (1 + markup)
