Contractor Profit Calculator Formula
Understand the math behind the contractor profit calculator. Each variable explained with a worked example.
Formulas Used
Total Costs
total_costs = labor + materials + overheadNet Profit
net_profit = revenue - (labor + materials + overhead)Profit Margin
profit_margin = revenue > 0 ? ((revenue - (labor + materials + overhead)) / revenue) * 100 : 0Variables
| Variable | Description | Default |
|---|---|---|
revenue | Job Revenue(USD) | 25000 |
labor | Labor Costs(USD) | 8000 |
materials | Material Costs(USD) | 6000 |
overhead | Overhead Costs(USD) | 3000 |
How It Works
How to Calculate Contractor Profit
Formula
Net Profit = Revenue - (Labor + Materials + Overhead) Profit Margin = (Net Profit / Revenue) x 100
Most successful contractors aim for a net profit margin between 8% and 20%, depending on the trade and market conditions.
Worked Example
A contractor completes a job for $25,000 with $8,000 labor, $6,000 materials, and $3,000 overhead.
revenue = 25000labor = 8000materials = 6000overhead = 3000
- 01Total costs = $8,000 + $6,000 + $3,000 = $17,000
- 02Net profit = $25,000 - $17,000 = $8,000
- 03Profit margin = ($8,000 / $25,000) x 100 = 32%
Ready to run the numbers?
Open Contractor Profit Calculator