Margin (gross margin)
Margin is profit measured against your price — the percentage of the sell price that's profit after costs.
If a job costs $1,000 and sells for $1,250, the $250 profit is a 20% margin. Margin is always a smaller percentage than the equivalent markup. To hit a target margin, divide cost by (1 − margin %) — e.g. $1,000 ÷ 0.80 = $1,250 for a 20% margin.
See also: Job profit calculator
Related terms
- Markup — Markup is profit measured against your cost — the percentage you add on top of cost to get your price.
- Gross profit — Gross profit is revenue minus the direct cost of the work (materials, labor, subs) — before overhead and other business expenses.
- Net profit — Net profit is what's left after all costs — direct job costs plus overhead and operating expenses — i.e., the actual bottom line.