Profit Margin Calculator
Calculate gross and net profit margins for your service business. Know your numbers to price with confidence.
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Total revenue from all services
Materials, parts, and supplies purchased for jobs
Wages, benefits, payroll taxes for technicians
Rent, insurance, vehicles, office, marketing, etc.
Your Profit Margins
Benchmark: Most service businesses target 15-25% net profit margin. You're in great shape!
Understanding Profit Margins
Gross Margin
Revenue minus cost of materials/parts, divided by revenue. This shows how efficiently you price materials on jobs. Target: 50%+ for most service businesses.
Net Margin
Revenue minus ALL costs (materials, labor, overhead), divided by revenue. This is your true profitability. Target: 15-25% for a healthy service business.
Markup vs. Margin
Markup is based on cost; margin is based on revenue. A 50% markup on a $100 cost means you charge $150 — but your margin is only 33%. Don't confuse them.
Why It Matters
Knowing your margins helps you set prices that actually make money, identify unprofitable jobs, and make informed decisions about growth, hiring, and equipment purchases.
Frequently Asked Questions
What is a good profit margin for a service business?
Most healthy service businesses target a net profit margin of 15-25%. Top-performing companies often reach 25-35%. Your margin depends on your industry, market, and business model. Plumbing and HVAC businesses typically see 15-25%, while cleaning and landscaping services may range from 10-20%.
What is the difference between profit margin and markup?
Profit margin is your profit as a percentage of revenue (selling price). Markup is your profit as a percentage of cost. For example, if a job costs you $100 and you charge $150, your markup is 50% but your profit margin is 33%.
How do I increase my profit margins?
You can increase profit margins by: raising prices (if your market supports it), reducing material costs through bulk purchasing or supplier negotiations, improving labor efficiency through training and better scheduling, reducing overhead costs, and focusing on higher-margin services.
Track Profit Margins Automatically
Business Genie tracks job costs, margins, and profitability for every job — so you always know your numbers.
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