Free Contractor Gross Margin Calculator
Check whether a proposed selling price produces enough gross profit to cover overhead and leave room for net profit.
Gross Margin Calculator
Why gross margin matters
Gross margin shows how much of each sales dollar remains after the direct costs of performing the work. Contractors still have to pay company overhead from that gross profit, so a job can show a positive gross profit and still be a poor business decision.
Tracking gross margin by job also makes it easier to compare different types of work instead of relying only on total contract value.
Use realistic direct costs
Include payroll burden, materials, fuel, equipment cost, subcontractors, disposal, and other direct job expenses. If those costs are incomplete, the resulting margin will be overstated.
FAQ
How is gross margin calculated?
Gross margin equals selling price minus direct cost, divided by selling price.
What is the difference between gross profit and gross margin?
Gross profit is a dollar amount. Gross margin expresses that gross profit as a percentage of revenue.
Does gross margin include company overhead?
Not necessarily. This calculator assumes overhead has not already been included in direct job cost.
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