Gross margin
(Revenue − materials) ÷ revenue
How much of each dollar is left after the parts and supplies the jobs used. It says whether jobs are priced above what they consume.
70.0%
Profit margin calculator for service businesses
Enter a month’s revenue and costs. This profit margin calculator shows your gross margin after materials, your net margin once labor and overhead are paid, and your markup on cost — and draws where each dollar of the month went.
Calculate your margin
Net margin of the sample month
30.0%
Net margin 30.0%. A sample month: of every $100 billed, $30.00 was kept once every cost was paid.
Against the pricemargin = profit ÷ price
Against the costmarkup = profit ÷ cost
- Net profit
- $3,000
- Gross profit · gross margin 70.0%
- $7,000
- Total costs
- $7,000
- Markup on cost
- 42.9%
A sample month — type your own numbers over it
Everything you billed for the month.
100% · the price
Materials, parts and supplies bought for jobs.
30.0% of revenue
Technicians’ wages, benefits and payroll taxes.
25.0% of revenue
Rent, insurance, vehicles, office, marketing and the rest.
15.0% of revenue
The sample month
$10,000 billed
Gross margin, net margin and markup
Each is a fraction of the same month: one stretch of it divided by another. Gross margin says whether jobs are priced above what they use, net margin what the business keeps once every cost is paid, and markup how far above cost the prices sit.
Net margin
(Revenue − materials − labor − overhead) ÷ revenue
What the business keeps from each dollar once everything is paid: the wages, the rent, the trucks and the rest.
30.0%
Markup on cost
(Revenue − all costs) ÷ all costs
The same profit, measured against what the work cost instead of what it sold for. The divisor is smaller, so in a month that made money the markup is always the larger number.
42.9%
In the sample month the same $3,000 is 30.0% of the price and 42.9% of the cost.
Profit margins, answered
What is the difference between profit margin and markup?
Profit margin is profit as a percentage of the selling price. Markup is profit as a percentage of cost. If a job costs you $100 and you charge $150, your markup is 50% but your profit margin is 33%. They measure the same profit against different numbers, so a price set with a 50% markup never gives a 50% margin.
The price
$50 · 33% margin
The cost
$50 · 50% markup
How do I increase my profit margins?
Raise prices where your market allows it, buy materials for less, cut the time crews spend driving and waiting, trim overhead, and do more of the work that earns the most. Run the calculator on each change to see what it does to net margin before you commit to it.
Cost each job in Business Genie
This calculator measures a month once it is over. Business Genie has job costing alongside estimates, invoicing and QuickBooks Online sync, on the web and in the iOS and Android app. Free for a month.
Free setup · Free trial · No credit card