How to calculate a builder’s gross margin
Enter the total cost of the job, then the gross margin you want as a percentage of the selling price. The calculator divides cost by one minus that percentage. It also shows the dollar difference between cost and selling price.
Selling price = job cost ÷ (1 − gross margin ÷ 100).
Worked example: a $10,000 job at 20% margin
A job costing $10,000 needs a selling price of $12,500 to leave $2,500 above the entered costs. That $2,500 is 20% of the $12,500 selling price. All figures in this example exclude tax.
Margin and markup are different
Margin compares the amount above cost with the selling price. Markup compares it with cost. Adding a 20% markup to $10,000 produces a $12,000 price and a 16.67% margin. A 20% margin on the same cost requires a 25% markup.
| Method | Selling price | Amount above cost | Gross margin |
|---|---|---|---|
| 20% markup | $12,000 | $2,000 | 16.67% |
| 20% margin | $12,500 | $2,500 | 20% |
What should go into job cost?
Use costs appropriate to your estimate: labour, materials, subcontractor quotes, plant hire, deliveries and other costs you expect to incur. If you allocate overhead to individual jobs, apply a consistent method and avoid counting an amount twice. The calculator uses only the total you enter; it does not obtain supplier prices or measure drawings.
Does the result include GST?
No. The calculator leaves tax out of the calculation. Keep your cost inputs on the same tax basis and assess tax separately when preparing the final quote.
Is the amount above cost my net profit?
Not necessarily. It is the selling price minus the costs you entered. Costs you have not included, changes in actual expenditure and business overhead can reduce what remains.
What margin should I choose?
This tool does not prescribe a target margin. Your costs, risk, capacity and commercial circumstances determine the target you enter. Compare the estimate with actual job costs after completion to improve future pricing.
More tools for your next job
Published by Site Margin, operated by WB Built Pty Ltd. General planning tools; check inputs and job requirements before relying on a result.