Free profit margin calculator

Enter selling price plus labor, overhead and material inputs to calculate total cost, profit, margin and markup for a job.

Separate cost from profitCompare margin and markup without mixing the two.

Create an estimate

Free, no sign-up, and the entered values stay in your browser.

Margin and markup

How to use the profit margin calculator

A useful profit calculation starts with a clearly defined job. Enter the price you expect to collect and the costs needed to deliver that work, then compare profit in money, margin on sales and markup on cost. The detailed guide below explains each formula, shows how to set a price and walks through complete examples.

Build a complete cost estimate
Enter the number of workers, hours per worker and loaded hourly labor cost. Add the job’s materials. Allocate monthly overhead using working hours and the job duration; do not count the same expense in two places.
Enter the actual selling price
Use the amount earned for the work after any discount. Keep sales tax collected for a tax authority outside revenue. If the customer has not approved an extra task, do not quietly include it in the expected price.
Read and compare all the results
Total profit shows the money remaining after the entered costs. Margin compares that profit with the selling price; markup compares it with cost. Change one assumption at a time, then move the agreed price into a written estimate.

Back to the calculator ↑

Calculate profit margin step by step

Profit margin expresses the share of revenue left after a specified set of costs. That makes it useful when comparing a small repair with a much larger project. However, the percentage and the profit amount answer different questions: a 40% margin on a $100 sale provides less money than a 20% margin on a $1,000 sale.

For a simple product example, assume an item costs $45 and sells for $75. Work through these five steps:

Establish cost: record the $45 spent to purchase or produce the item. Decide which direct costs belong in this figure.
Establish revenue: use the $75 selling price, excluding tax collected for a third party.
Subtract cost: $75 − $45 = $30 profit.
Divide by revenue: $30 ÷ $75 = 0.40.
Convert to a percentage: 0.40 × 100 = 40%.

This sale therefore leaves 40 cents of profit from every dollar of revenue, before any expenses that were excluded from the $45 cost. For a service job, follow the same sequence after adding labor, materials and the overhead allocation. Comparing results is meaningful only when both calculations include the same kinds of costs.

Gross margin and related formulas

Start with revenue and cost measured for the same sale or accounting period. Use percentages consistently: 25% is 0.25 when a formula asks for a decimal.

Profit = revenue − cost
Margin (%) = profit ÷ revenue × 100
Margin (%) = (revenue − cost) ÷ revenue × 100

You can rearrange the equations to solve a pricing question instead of calculating a percentage after the sale.

What you need to find	Formula	Worked illustration
Selling price from cost and target margin	Cost ÷ (1 − margin as a decimal)	$600 ÷ 0.75 = $800 at 25%
Revenue from profit and margin	Profit ÷ (margin ÷ 100)	$200 ÷ 0.25 = $800
Maximum cost at a known price and margin	Revenue × (1 − margin ÷ 100)	$800 × 0.75 = $600
Profit at a known price and margin	Revenue × margin ÷ 100	$800 × 25 ÷ 100 = $200

The second formula requires a nonzero margin. The first cannot produce an ordinary positive-cost selling price at a 100% target margin. These are mathematical limits, not evidence that an empty or zero result means a business is profitable.

In financial statements, gross margin normally uses the cost of goods sold or cost of delivering services. This calculator instead subtracts the specific job costs you enter. Including overhead makes the estimate more complete for quoting, but it does not automatically make the output your company’s reported gross or net margin.

Calculate markup and turn it into a selling price

Markup is the increase above cost used to arrive at a selling price. Its denominator is cost, not revenue. It is often useful when a supplier price is known and you need to add compensation for procurement, handling, risk and profit.

Markup (%) = (selling price − cost) ÷ cost × 100
Selling price = cost × (1 + markup as a decimal)

Suppose materials and labor cost $120 and the job sells for $180. Profit is $60. Dividing $60 by the $120 cost produces a 50% markup. To price the same job from the start, calculate $120 × (1 + 0.50) = $180.

Enter the right form of the percentage. A 50% markup is 0.50 inside the selling-price formula. Multiplying cost by 1.50 adds 50%; multiplying by 50 does not. If you add a fixed dollar profit instead, add that amount once after totaling cost.

Markup does not necessarily represent take-home profit. If the cost figure excludes vehicle expenses, insurance or administration, the dollars above cost must still cover those items. Make the cost definition visible to anyone using your pricing worksheet.

Understand profit, gross margin and net margin

Several familiar terms describe related calculations, but they should not be treated as interchangeable in a business report.

Term	Meaning	What to check
Revenue or sales	Income earned from the goods or services being measured	Discounts, returns and taxes collected for others
Cost of goods sold (COGS)	Costs classified as producing or delivering those sales	The accounting policy for labor, supplies and subcontractors
Gross profit and gross margin	Revenue less COGS, expressed in money or as a share of revenue	Other operating costs may still need to be paid
Operating margin	Operating profit as a share of revenue after operating expenses	How administration and owner compensation are classified
Net profit margin	Net income after the applicable expenses and other income items, divided by revenue	Financing costs, taxes and the period covered
Sales or job margin	A margin calculated for a particular sale, service or project	Which costs have actually been allocated to that job

A search for a revenue calculator, sales margin formula or profit calculator may lead to the same underlying subtraction and division. The useful distinction is the cost scope. Do not compare a job estimate that includes allocated overhead with a competitor’s gross margin that excludes it.

Profit also differs from cash in the bank. An unpaid invoice can contribute to accounting revenue while the customer has not transferred money. Buying equipment, repaying loan principal or collecting an older invoice changes cash without having the same effect on the current period’s profit.

Margin and markup describe the same sale differently

Take a job with $300 of cost and a $500 price. Both calculations begin with $200 profit. Margin is $200 ÷ $500 = 40%. Markup is $200 ÷ $300 = 66.67%. Neither calculation contradicts the other: one asks what you keep from sales, while the other asks how much you add to cost.

Target margin	Equivalent markup	Selling price at $600 cost	Profit
10%	11.11%	$666.67	$66.67
20%	25%	$750.00	$150.00
25%	33.33%	$800.00	$200.00
30%	42.86%	$857.14	$257.14
40%	66.67%	$1,000.00	$400.00

For positive cost and profit, markup is higher because its denominator is smaller. A 20% markup produces a 16.67% margin, not a 20% margin. Agree which measure your team uses before applying a standard percentage to estimates.

Compare industry margins with the right context

Industry comparisons can help you ask better questions about pricing, but a percentage without a survey period, sample and cost definition is not a dependable benchmark. A solo owner who omits their own labor can appear more profitable than a company that pays market wages for the same work.

For a documented US example, the NAHB report published in April 2026 gives residential remodelers an average gross margin of 29.9% and net margin of 6.3% for 2024. The gap illustrates why a strong gross margin is not the same as an equally strong net margin. It is not a benchmark for every trade below.

The following ten trade categories show what to investigate when comparing margins. The numerical bands are illustrative planning scenarios, not measured industry averages or recommended prices. Use them to see how different outcomes would affect your own revenue and cost plan.

Trade or service	Net-margin scenarios to model	Factors to investigate
Plumbing	10–20%	Emergency callouts, loaded technician pay, travel and return visits
Electrical	10–15%	Licensing, testing, subcontract work and the split between labor and materials
HVAC	8–20%	Equipment purchases, installation crews, seasonal demand and service agreements
General contracting	5–12%	Subcontractor scope, material changes, project supervision and change orders
Window and door installation	10–18%	Product procurement, fitting time, disposal, upgrades and warranty work
Residential cleaning	10–20%	Paid travel, crew-hours, repeat bookings, supplies and cancellations
Junk removal	12–20%	Truck capacity, weight, sorting time, tipping fees and route density
Handyman services	8–15%	Minimum callout charges, owner labor, equipment and time between jobs
Concrete work	5–10%	Delivered materials, site preparation, equipment utilization and crew efficiency
Lawn maintenance and landscaping	Maintenance: 5–10%	Recurring routes versus design/installation work, weather, machines and material intensity

For example, on $100,000 of revenue a 5%, 10% or 20% net-margin scenario leaves $5,000, $10,000 or $20,000 after the included expenses. Those amounts are not universal labels for failure, sustainability or growth. Owner compensation, debt payments, replacement equipment and the business’s scale determine whether the outcome is adequate.

Use the calculation to improve the next estimate

When a margin is below the target, separate the causes before changing the price. Was the job duration understated? Did a material purchase increase? Was a discount applied without reducing scope? Were travel, setup or a return visit omitted?

Track planned and actual costs: compare the estimate with time records, receipts and the final invoice.
Handle changes while the work is active: describe the extra task, price and approval in writing.
Review purchasing and scheduling: reducing waste or avoidable travel can improve profit without reducing service quality.
Consider reinvestment: training, equipment maintenance and customer support have costs even when this month’s margin looks high.
Review price and demand together: a higher percentage is not useful if the resulting sales volume cannot support the business.

Keep the same cost definition across repeat calculations. The result is a planning aid, not a replacement for financial statements or advice from an accountant familiar with your business.

Three complete profit margin and markup examples

Illustrative calculations, not market quotes. Replace these assumptions with your own costs and measurements.

Plumbing: find the margin on an agreed price

Scenario: a plumbing business agrees to complete a repair for $900. Its estimate contains $675 in labor, parts and the allocated job expenses. All figures exclude tax collected from the customer.

Inputs

Revenue: $900
Entered job cost: $675
Question: what percentage of the selling price remains?

Calculation

Profit = $900 − $675 = $225.
Margin = $225 ÷ $900 × 100 = 25%.
Markup = $225 ÷ $675 × 100 = 33.33%.

Interpretation: the job leaves $225, or 25 cents per dollar of revenue, after the entered expenses. If additional company expenses were not allocated, they still need to be covered before treating this as net profit.

$225 profit · 25% margin · 33.33% markup

Residential cleaning: set a price from a markup target

Scenario: a cleaning visit has $90 of entered cost. The business wants to add a 100% markup, meaning the amount above cost should equal the cost itself.

Inputs

Cost per visit: $90
Markup target: 100% = 1.00
Question: what should the customer price be?

Calculation

Selling price = $90 × (1 + 1.00) = $180.
Profit = $180 − $90 = $90.
Margin = $90 ÷ $180 × 100 = 50%.

Interpretation: doubling cost gives a 100% markup but only a 50% margin. The percentage is an assumption for this example, not a recommended cleaning rate. Confirm that labor, travel, supplies and overhead have all been handled consistently.

$180 selling price · 100% markup · 50% margin

Landscape design: work backward from a 20% margin

Scenario: a landscape installation has an estimated $6,400 of complete job cost. The business wants profit to represent 20% of the final selling price, rather than simply adding 20% to cost.

Inputs

Estimated cost: $6,400
Target margin: 20% = 0.20
Cost share of the final price: 1 − 0.20 = 0.80

Calculation

Selling price = $6,400 ÷ 0.80 = $8,000.
Profit = $8,000 − $6,400 = $1,600.
Margin check = $1,600 ÷ $8,000 × 100 = 20%.
Equivalent markup = $1,600 ÷ $6,400 × 100 = 25%.

Interpretation: the quote must be $8,000 before any separately calculated tax. Adding only 20% to cost would give $7,680 and a 16.67% margin, missing the stated target.

$8,000 selling price · $1,600 profit · 20% margin

Profit margin questions

What is the difference between gross and net profit margin?

Gross margin compares revenue with the costs classified as producing or delivering those sales. Net margin uses net income after the other applicable expenses and income items for the period. Rent, administration, financing costs and taxes can create a large difference between the two.

Use gross margin to understand the economics of delivery and net margin to assess the broader financial outcome. Neither percentage, by itself, tells you how much cash is available: customer payment dates, equipment purchases and debt repayments also matter. The calculator reports the costs you enter, so identify that cost scope before calling the result gross or net margin.

Can a profit margin be too high?

A high margin is not automatically a problem or proof that a price is unfair. It may reflect specialized expertise, efficient delivery or a product customers value. Examine the result alongside sales volume, retention, service quality and competitive alternatives.

A very high reported margin can also reveal missing costs, unpaid owner labor or deferred maintenance. If profit is healthy, plan how much should support reserves, equipment, training, customer service and growth. Avoid improving the percentage on paper by excluding expenses that the business still has to pay.

What does sales margin mean?

Sales margin is the share of sales revenue remaining after a defined set of selling or delivery costs. For a $250 sale with $175 of included costs, the $75 profit produces a 30% margin.

The label alone does not tell you whether administration, travel or overhead has been included. State the cost definition and period whenever you compare sales margins across services, staff members or businesses. A sales margin for one job is not automatically the company’s net profit margin.

How do I price a job for a 20% profit margin?

Convert 20% to 0.20.
Subtract it from 1 to find the cost share: 0.80.
Divide the complete cost by 0.80.
Check that profit divided by the new price equals 20%.

At $400 cost, the price is $400 ÷ 0.80 = $500. Profit is $100 and margin is $100 ÷ $500 = 20%. Adding 20% to cost gives $480 instead, which is a 20% markup and only a 16.67% margin.

What counts as a good profit margin?

There is no single percentage that fits every industry or business. Compare the same margin definition, accounting period and type of company. Include a reasonable treatment of owner labor and check that profit is sufficient in dollars, not just as a percentage.

Model several outcomes rather than treating a popular rule of thumb as a fact. At $100,000 revenue, 5%, 10% and 20% leave $5,000, $10,000 and $20,000 respectively. Whether those outcomes are adequate depends on the costs already counted, capital requirements, risk and the amount of work needed to earn that revenue. Use dated, documented industry studies when available.

How do I calculate profit margin in Excel or a spreadsheet?

Use separate cells for inputs and calculations. For example:

Put cost in A2 and revenue in B2.
In C2, enter =B2-A2 to calculate profit.
In D2, enter =C2/B2 and format the cell as a percentage.
For markup, use =C2/A2 in another percentage-formatted cell.

With A2 = 300 and B2 = 500, C2 is 200, margin is 40% and markup is 66.67%. Do not multiply by 100 and also use percentage formatting; that would display the percentage 100 times too large. A zero revenue or cost denominator needs interpretation rather than being treated as a meaningful percentage.