Contractor Profit Margin Calculator
Stop guessing. Know exactly how much you're clearing on every job. Account for labor, materials, overhead, and taxes in seconds.
As a contractor, knowing your true profit margin is the difference between building wealth and working for free. This calculator accounts for what most contractors forget: overhead, taxes, and the hidden costs that eat into your bottom line.
Whether you're a handyman pricing small jobs or a general contractor bidding large projects, this tool helps you see exactly what you're clearing after materials, labor, overhead, and self-employment taxes.
How to Use This Calculator
Enter your material costs (lumber, supplies, fixtures)
Add labor costs (your time or crew wages)
Set your overhead percentage (typically 10-20% for most contractors)
Include your tax rate (remember self-employment tax is 15.3%)
Enter your quote price to the customer
See your true net profit and margin percentage
Total Net Profit
$0.00
Profit Margin
0.0%
Why This Matters
The Cost of "Working for Free"
Most contractors fail to account for the "hidden killers": administrative time, fuel, vehicle maintenance, and small sundries. If your margin isn't calculated correctly, you're not just losing money—you're subsidizing your client's project.
The Overhead Trap
Overhead isn't just a number; it's the foundation of your business survival. A margin that looks good on paper (e.g., 20%) can quickly evaporate when shop rent and insurance premiums are factored in.
Successful contracting businesses target a minimum of 25% net profit margin. Anything less puts your business in the "danger zone" where a single delayed material delivery or one sick employee can turn a project into a net loss.
What's a Good Profit Margin for Contractors?
Industry benchmarks vary by trade:
Frequently Asked Questions
What's the difference between markup and margin?
Markup is the percentage added to cost to get price. Margin is the percentage of the final price that's profit. A 50% markup = 33% margin.
Should I include my own labor in the calculation?
Yes. Many contractors make the mistake of not paying themselves. Your time has value—include it as labor cost.
What overhead costs should contractors include?
Vehicle expenses, insurance, tools, phone, licensing, marketing, and administrative time. Most contractors underestimate overhead at 10% when it's often 15-25%.
How do taxes affect profit margin?
Self-employment tax (15.3%) plus income tax can take 30-40% of your profit. Always calculate margin AFTER taxes.