Free Profit Margin Calculator
Try our profit margin calculator
Use our job profit calculator to see how profitable your current pricing strategy is. Once you have priced a job, simply add up your labor, material, and overhead costs, then the amount you charged the client for service. You can then get paid for your work using our free invoice template.
About this calculator
- Add up labor, material, and overhead costs
- Factor in the service price you charge clients
- Learn how much profit you’re earning on completed jobs
- Track your business’s financial health
Profit Margin Calculator
Find out if your services are turning a profit. Just enter your labor costs, material costs, overhead expenses, and service price into our margin percentage calculator.
Frequently Asked Questions
Your profit margin is a percentage of income that your business keeps after other expenses, like materials and labor, are paid for. When you apply this percentage to a specific job, you’ll see your profit for that job as a dollar amount. The higher your percentage, the more profitable your business will be.
There are a few different types of profit margins:
• Gross profit margin is how much money your business keeps after subtracting the cost of labor and materials.
• Operating profit margin is what you keep after expenses, but before taxes or interest.
• Net profit margin is the percentage of income that you keep after all expenses, taxes, and interest are subtracted.
A good net profit margin percentage is normally 10–20% of your job costs. However, this percentage might vary depending on your industry.
This gross profit percentage calculator shows you how profitable a job is, based on how much it costs to perform a job and how much you’re charging your customer. When you use the calculator after a job is finished, you can make sure that your team is working efficiently, you’re staying within budget, and your business is profitable. Or, if you use it while you’re pricing services, you can double-check that you’re charging an amount that profits your business.
Profit margin calculators are perfect for brand-new entrepreneurs, or for experienced business owners who don’t want to add up receipts, time sheets, and invoices with pen and paper. Try this fast and easy way to calculate your profit margin—without having to do the math yourself.
Our gross margin calculator is just one of our free tools. Together these tools can help you store client information, convert estimates to invoices, and get paid for your work. Bookmark this page and use it to check your profit margins after every job.
A profit margin calculator makes it easy to calculate how much money your business keeps after costs and expenses. Here’s how a gross profit calculator can help you:
• Quickly add up the various components of a job
• Make sure every job is profitable
• See if you’re over- or underestimating costs and expenses
• Prevent errors that affect your accounting
With a profit margin calculation tool, it takes only seconds to find out how profitable a job was. Easily see if you underestimated labor hours, if material costs went over budget, or if rising expenses are cutting into your profit margins.
Pro Tip: Price your services more accurately with our free service price calculator.
Knowing how to calculate profit margin is as simple as using this profit margin formula:
( (Service price – Cost) / Service price ) x 100 = Your profit margin percentage
To calculate your profit margin, all you need to do is enter this information into the profit margin calculator:
• Cost of labor for the job
• Total cost of all materials used
• Hourly overhead expenses
• Price you charged the client for services
Calculate the labor costs for a completed job using this formula:
Number of employees on the job x Hours to complete job x Hourly pay
If the job required multiple employees with different hourly wages, just multiply each person’s hours by their hourly pay, then add up the results.
Let’s say Employee A worked 20 hours at $18/hour, and Employee B worked 24 hours at $20/hour. Employee A’s labor cost is $360 and Employee B’s is $480, bringing your total labor costs for the job to $840.
You can also use time and job tracking software to store employee timesheets and record labor costs.
(Want to make sure you’re offering competitive wages? Check out our free salary guides.)
Go through all of your material and supply receipts for the job, and add up your purchases to figure out what everything cost.
If you special-ordered materials or used up your inventory for a specific product, just add up your suppliers’ listed prices for those items. Remember to include your markup percentage for materials, if you have one.
If you only used part of a particular material, you can figure out the value of the materials the job used up. For example, if you used up half a bag of fertilizer, divide the value of the fertilizer by half and charge the client accordingly.
Want to make this process fast and easy? Use expense tracking software to log expenses, assign them to jobs, and snap and attach receipt photos.
Start by adding up all your monthly operating costs, like rent, marketing costs, business insurance, cell phone or data plans, or business management software. If you have annual expenses like vehicle registration, add them up and divide by 12 to get a monthly total.
Next, divide your total monthly overhead costs by the number of workable hours each month. This tells you your hourly expenses. Multiply this amount by the number of job hours to see how much of your job earnings will go toward overhead.
Here’s the formula for calculating overhead expenses for a completed job:
(All monthly expenses / Working hours each month) x Hours to complete the job
Let’s say you have $2,500 in monthly expenses. Your business also has two full-time employees working a combined total of 320 hours each month. This means that for every hour of work, your business has $7.81 in overhead costs. Multiply that amount by the 44 hours it took to complete a job, and you’ll see that the job cost you $343.64 in overhead.
There’s a big difference between revenue and profit.
Revenue is the money your business brings in by providing services. Once you receive it, this amount is divided up to pay for labor costs, materials, and business expenses.
Profit is the money your business gets to keep after you’ve paid for all those costs and expenses. This is just a portion of your revenue.
Markup is the extra percentage you charge for services, beyond your normal costs and expenses, in order to profit from each job.
Profit margin is the percentage of the overall job value that your business gets to keep after subtracting all of your expenses.
Let’s say your labor, materials, and overhead for a job add up to $1,500. Your 30% markup brings the total job value to $1,850, giving you $350 in profit at a margin of 18.92%.
READ MORE: Markup calculation guide for small business owners
If your profit margin isn’t as high as you’d like, there are several ways to improve it:
• Increase prices to bring in more money for the business
• Lower overhead costs to be more efficient with the money you’re already earning
• Improve your team’s efficiency so you’re doing more work in the same time
• Advertise your business to bring in more paying customers
• Upsell clients on new or added services that will benefit them
• Increase revenue from new customers or existing clients
Pro Tip: Not sure where to start with marketing? Try our free Tearaway flyer tool, or design your own marketing materials in Looka.
When you’re done using our gross profit margin calculator, use our free invoice template to create a service invoice for your clients.
You can also upload your job information into invoicing software like Jobber. This makes it easy to write an invoice using your desktop or mobile app.
Here’s what you can do with Jobber:
• Accept new work requests through your website or Local Services Ads
• Create estimates and convert them into jobs
• Store customer information and communicate with clients via email and SMS
• Schedule teams, route work, track time, and log expenses
• Convert completed jobs into invoices and send them to clients, fast
• Send automated invoice follow-ups using professional templates
• Take payment in person or online with credit card processing
• Use built-in reporting to see how your business is doing
Learn more about how Jobber can help you create invoices and get paid faster.