Price one job from the bottom up: every cost that goes into it, the overhead it has to carry, and the margin you want to keep. Getting this wrong doesn't feel like anything at the time — you win the job, you do the work, and the money just isn't there at the end of the year. Free, no email, nothing saved.
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The values below are starting points. Replace every one of them with your own — the answer is only as good as what you put in.
What the supply house charges you for this job, before waste.
Extra material you buy but don't install. 5% is a starting point — replace it with your own number.
Total field hours for everyone on the job, including drive time and shop time.
Your loaded cost per hour: wages plus payroll tax, workers comp and benefits — not the wage on the paycheck. $80 is a starting point; put your own number in.
What your subs will invoice you for this job. Leave at 0 if you self-perform.
Rental, dump fees, permits, fuel surcharge — hard costs that aren't material or labor.
Annual overhead divided by annual DIRECT job cost (material, field labor, subs, equipment) — not by total cost. 12% is a placeholder; pull your own from last year's P&L.
The share of the price you want to keep. This is margin, not markup — the two are different numbers. 20% is a starting point, not a target anyone can set for you.
$2,870
This is the number that goes on the quote. Round it up to something clean, never down.
Your floor. Sell below this and you are paying the customer to let you work.
What is left after every job cost and this job's share of overhead. This is your negotiating room, all of it.
The same price as a markup on total cost, overhead included. If you are used to marking up material and labor only, your number will be higher — that one is on the next line.
The same price as a markup on direct cost, before overhead — the version most contractors carry in their head. It has to be the higher of the two, because it still has overhead to cover.
What you'll buy, not what you'll install.
Hours times your loaded rate. If this looks low, you left drive and shop time out of the hours.
Everything that goes away if the job goes away — before any overhead is added.
This job's share of insurance, trucks, phone, software and unbilled office hours.
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A defensible price starts as a stack of costs, not a gut number. Material, plus the waste you actually buy. Labor hours at your loaded hourly cost — wages plus payroll tax, workers comp and benefits, not the number on the paycheck. Subs at what they invoice you. Rental, dump fees, permits. That total is what the job costs to produce. Overhead comes next: truck payments, insurance, phone, software, the hours you spend estimating and chasing invoices. Those get recovered as a percentage spread across direct job cost. Only after all of that do you apply margin. Price a job from the bottom up and you can defend every dollar at the kitchen table, because every dollar traces back to something you actually buy.
Adding a percentage to cost and calling it margin is an easy mistake to make, and it costs money every time. Markup is profit divided by cost. Margin is profit divided by price. Add 20 percent to a $10,000 cost and you get $12,000 — that is 20 percent markup, but only 16.7 percent margin, because $2,000 divided by $12,000 is 16.7. To actually keep 20 percent, divide by 0.80: $10,000 / 0.80 = $12,500. That is $500 a job you thought you already had, on every job, all year. This calculator asks for the margin you want to keep and divides, then shows that same price as a markup two ways — on total cost and on direct cost — so you can check it against however you have always quoted.
Overhead is every cost that does not belong to one specific job: insurance, truck payments and fuel, phone, software, the office, your accountant, and the unbilled hours you spend estimating and collecting. Pull last year's P&L and add up those lines. Then add up your direct job costs for the same period — material, field labor, subs, equipment. Divide overhead by direct job cost and you have your recovery percentage. If overhead was $84,000 and direct job costs were $560,000, that is 15 percent. Put that number in the field. Divide by a total-cost figure instead and you will under-recover on every job. Re-run it once a year, and again any time you add a truck, a hire or a payment. Skip this step and overhead comes quietly out of your margin instead.
Every number here is made up to show the shape of it — yours will be different. Blown fiberglass to R-49 over 1,600 square feet. Material is $1,850 at the supply house, and you add 8 percent waste because bags get opened, settle and blow long — $1,998. Two guys for nine hours is 18 hours; a loaded cost of $62 an hour puts labor at $1,116. No sub. Machine rental plus disposal of the old batts is $340. Direct cost is $3,454. Overhead at 15 percent adds $518.10, so the job costs $3,972 to produce. You want to keep 22 percent, so the price is $3,972 / 0.78 = $5,092. Call it $5,100. Profit on the job is $1,120. That same price is a 28.2 percent markup on total cost and a 47.4 percent markup on direct cost — one job, one price, two numbers, which is exactly why the two get mixed up. Now you know how much room you have when the homeowner asks.
Four leaks show up over and over. Waste gets left out, because you priced the square footage you install instead of the material you buy. Drive time and shop time get left out of labor hours, so the crew is paid for hours the customer never was. Subcontractor invoices get passed through at cost, which means you carry the risk, the scheduling and the warranty for free. And the small hard costs get eaten one at a time: dump fees, permits, rental, the second run to the supply house. Give each one its own field and its own number. Anything that doesn't get a field, you eat.
The right margin is the one that covers your overhead, pays you a real wage as the owner, and leaves cash to replace equipment — it is not a number anyone can hand you. Work it backwards. Decide what the business needs to net for the year, divide by the job volume you can actually produce, and price to that. Then check it against what it takes to win work in your market, and track it job by job so you learn which work is worth doing.
Markup is profit divided by cost. Margin is profit divided by price. Same dollars, different denominator, and markup is always the larger number — so a price built by adding a percentage to cost always keeps less than the percentage suggests. To hold a margin, divide cost by one minus the margin: for 25 percent, divide by 0.75. Use margin when you are deciding what the business needs to keep, and markup as a quick field check on a price somebody already quoted.
Yes, in almost every case, because you carry the risk, the scheduling, the warranty and the collection on that work whether the sub gets it right or not. In this calculator subcontractor cost enters as a direct job cost, so it picks up your overhead recovery and your margin automatically. A sub who bills you $2,800, at 15 percent overhead and 30 percent margin, prices at $4,600 in the customer's total. Anything less and you are coordinating for free.
Use your own history instead of a rule of thumb — pull three or four recent jobs, compare what you bought against what you installed, and the percentage falls right out. Waste changes by trade and by job: cut-heavy trim and tile waste far more than a straight run of pipe, and a chopped-up roof wastes more than a simple gable. Enter zero when you are pricing from a takeoff that already includes the extra material.
No. Give the customer scope and price; the cost stack is for you, so you know your floor before you walk in the door. Homeowners who see your material cost start negotiating your labor, your overhead and your profit line by line, and you end up defending your business model instead of your work. Put the detail in the scope instead — what is included, what is not, and what the options cost. That is the detail that wins jobs.
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