Most margin calculators divide two numbers and stop. This one costs the job properly, with labor burden and overhead included, then shows what you actually keep, what markup you needed, and what the gap is costing you across a year.
Leaving this at zero is the single most common costing error. 35% is a reasonable residential default.
Overhead
Not sure?
What you charged
Your gross margin vs your trade
Net profit margin
| The number | Used as a markup, you get | Wanted as a margin, you need |
|---|
Same job, same costs. Price moves, and every dollar of the move lands on the bottom line.
| Price | Net margin | Net profit | vs now |
|---|
A contractor decides they want a 30% margin. They add 30% to their costs. They believe they are running at 30%. They are running at 23.1%.
Markup is added to cost. Margin is taken out of price. They are different operations on different numbers, and the gap widens the higher you go. At a 50% target the gap is enormous: a 50% markup yields a 33.3% margin, and to actually reach 50% you need to mark up 100%.
The two formulas. Margin from markup: margin = markup / (1 + markup). Markup from margin: markup = margin / (1 - margin). Every number in the table above comes from those two lines.
The wage is not the cost. On top of it sit payroll taxes, workers compensation, liability insurance, benefits, paid time off and training. Published 2026 figures put labor burden at 30% to 60% of base wage, with residential construction around 30 to 45% and high-risk trades higher, because workers compensation alone can run 7 to 15% of payroll on roofing.
A technician at $32 an hour costs roughly $43 an hour at a 35% burden. Cost a 40-hour job at the bare wage and you have understated it by $448 before you have made a single pricing decision. Insurance premiums rose 10 to 20% in 2026, so a burden rate set two years ago is now wrong.
Overhead is everything not chargeable to a job: the office, the software, the trucks, the admin salary, your own pay. The simplest way to apply it is as a percentage of direct job costs. Overhead of $80,000 against $400,000 of direct costs is a 20% overhead rate, meaning every dollar of direct cost has to carry twenty cents before a cent of profit exists.
This is why gross margin is a dangerous number to price against on its own. A job at 40% gross margin carrying a 25% overhead rate can land in single digits, and a thin job can go negative while still looking profitable on the gross line.
Job break-even is your total cost: direct costs plus the overhead that job has to carry. Price at break-even and you have worked for nothing, but you have not lost anything either. Price below it and the job is being funded out of your other work. The calculator shows this figure on every run, because it is the only number in the stack that answers "how far can I discount this and still survive".
Company break-even is a different question, and it is the one that catches contractors out. It is the revenue the business needs before it makes a cent:
Company break-even revenue = annual overhead / gross margin. Carry $180,000 of overhead at a 38% gross margin and you need $473,684 of revenue before profit starts. Lift gross margin to 45% and that falls to $400,000, which is $73,000 less work sold for the same result.
That is why margin work beats volume work. Selling more at a thin margin raises the break-even point almost as fast as it raises income. Raising margin lowers the bar you have to clear at all.
Gross margin is revenue minus direct job costs. Net margin also subtracts overhead. Both figures below are from published 2026 industry benchmarks.
| Trade | Gross margin | Net margin | Why it sits there |
|---|---|---|---|
| Electrical | 35-50% | 7-12% | Least material-heavy work, licensing keeps competition down |
| Plumbing | 35-55% | 8-12% | Emergency demand and repeat service support pricing |
| Painting | 40-55% | 8-15% | Labor-dominant, low material share |
| HVAC | 30-45% | 8-12% | Equipment cost caps gross; maintenance plans lift net |
| Roofing | 35-50% | 8-15% | Materials near 35% of the job; storm and insurance work lifts it |
| Remodeling | 25-40% | 10-18% | Long jobs, high change-order and scope risk |
| General contracting | 25-40% | 5-7% | Heavy subcontractor pass-through compresses both lines |
Top performers clear these bands. Well-run general contractors reach 10% net and specialty trades can hit 15 to 20%. The gap between the middle and the top of a band is rarely about charging more, it is usually about costing correctly and recovering overhead on every job rather than some of them.
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Markup is added to your cost; margin is taken out of your price. A 25% markup produces a 20% margin, not 25%. The formula is margin = markup / (1 + markup). Because the two are always different, pricing at a markup you think is your margin quietly underprices every job you sell.
66.7%. The formula is markup = margin / (1 - margin), so 0.40 / 0.60 = 0.667. Contractors targeting 40% with a 40% markup land at 28.6% instead.
Everything paid on top of the base wage: payroll taxes, workers comp, liability, benefits, PTO, training. Published 2026 ranges run 30 to 60% of base wage. Residential sits around 30 to 45%. Roofing and other high-risk trades run higher because workers compensation alone can be 7 to 15% of payroll. Recalculate it at least twice a year; premiums rose 10 to 20% in 2026.
Annual overhead divided by annual direct job costs. $80,000 of overhead against $400,000 of direct costs is 20%. Include the office, insurance, vehicles, software, admin salaries and your own pay, anything not chargeable to a specific job.
Gross margin only subtracts direct job costs. Net margin also subtracts overhead. A job at 40% gross margin carrying a 25% overhead rate can land in single digits or go negative, which is why gross margin alone is not safe to price against.
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Where the benchmarks come from
Gross and net margin ranges by trade, labor burden ranges of 30 to 60% of base wage, the 7 to 15% workers compensation figure for high-risk trades, the 10 to 20% 2026 insurance premium increase, and the overhead-rate method are drawn from published 2026 construction industry benchmark reporting. The markup and margin formulas are arithmetic, not estimates. This tool does not use or publish any client data. Last reviewed 2026.