A contractor profit margin calculator starts with one question: if this job costs a certain amount to deliver, what selling price is required to achieve the margin you want?
The core formula
For gross-margin pricing:
Selling price = Cost ÷ (1 − Target margin)
If estimated job cost is £10,000 and target gross margin is 30%, the selling price is:
£10,000 ÷ 0.70 = £14,285.71.
Expected gross profit is £4,285.71, which is 30% of the selling price.
Why adding 30% to cost is different
If you simply add 30% markup to a £10,000 cost, the selling price becomes £13,000. Profit is £3,000, but gross margin is only about 23.1%.
This is why markup and margin cannot be treated as interchangeable percentages. Our markup vs margin guide explains the relationship in more detail.
Build the full cost first
A margin calculator only works if the cost input is realistic. Include the direct costs needed to deliver the job, such as labour, materials, subcontractors and job-specific expenses. If a cost is missing, the calculated selling price will be too low.
Use the calculator before sending the quote
The best time to review margin is before the customer sees the price. Once a quote has been accepted, correcting a pricing mistake becomes much harder.
Test multiple margin scenarios
For a £15,000 job cost:
- 20% margin → £18,750 selling price
- 25% margin → £20,000 selling price
- 30% margin → about £21,428.57 selling price
- 35% margin → about £23,076.92 selling price
Scenario testing makes the pricing trade-off visible before you commit to a number.
Check the achieved margin after the job
The estimated margin is only a forecast. When the job is complete, compare the final selling price with actual cost. If actual cost exceeds the estimate, achieved margin will be lower even if the original pricing formula was correct.
Use a repeatable calculator
The Markup vs Margin Pricing Calculator converts cost and target margin into a selling price and shows the equivalent markup, expected profit and final quote. For a wider estimating and job-control workflow, use Contractor Profit OS.