Markup and margin are not the same number
This trips up more contractors than any other pricing mistake. Markup is how much you add on top of your costs. Margin is how much of the final price is profit. A 50% markup is only a 33% margin — not 50%. Confuse the two and you'll think you're making money you're not.
The formula
To hit a target margin, don't multiply your cost by “one plus the margin.” Divide. Price = Cost ÷ (1 − margin). Want a 30% margin on a job that costs you $1,000? That's $1,000 ÷ 0.70 = $1,429 — not $1,300. That $129 on every job is the gap between a healthy business and a struggling one.
Count all your costs first
Your cost isn't just materials. It's materials, labor (including payroll taxes), and a share of overhead — truck, tools, insurance, fuel, phone, software. If you price off materials alone, overhead eats your profit quietly. Add it in before you apply your margin.
Why contractors underprice
Most underpricing comes from three habits: calculating markup instead of margin, forgetting overhead, and dropping the price to win a nervous client. The fix for all three is knowing your real numbers before you quote — then holding the line.
Run the numbers in seconds
Use the free profit margin calculator to enter your job costs and target margin and get the exact price to charge. Then build the quote with the estimate generator, or download BIG INVOICE to send it from your phone.