How to Calculate Job Margin and Markup for a Restoration Job

Margin and markup use the same gross profit figure but divide it by different numbers. Using the same percentage for both produces different prices.

To run your own job, open the Job Cost and Margin Calculator. This guide covers the arithmetic for one job. For company-level profitability, the existing guides linked below go further.

Gross Profit for One Job

• Total direct costs = labor + materials + equipment + subcontract + other direct costs
• Gross profit = revenue − total direct costs

The calculator has fields for Job Revenue, Direct Labor, Materials, Equipment, Subcontract, and Other Direct Costs. Blank cost fields count as zero.

Margin and Markup Divide by Different Numbers

• Gross margin = gross profit ÷ revenue × 100
• Markup = gross profit ÷ total direct costs × 100

Margin describes profit as a share of job revenue. Markup describes profit as a share of what the job cost.

A Worked Example

Hypothetical example: a job with $10,000 revenue and $7,000 total direct costs.

• Gross profit: $10,000 − $7,000 = $3,000
• Gross margin: $3,000 ÷ $10,000 = 30%
• Markup: $3,000 ÷ $7,000 ≈ 42.86%

The same job shows a 30% margin and a 42.86% markup. Both are correct. They answer different questions.

Why a 30% Markup Is Not a 30% Margin

Suppose the same $7,000 of direct cost is priced with a 30% markup.

• Price: $7,000 × 1.30 = $9,100
• Gross profit: $9,100 − $7,000 = $2,100
• Gross margin: $2,100 ÷ $9,100 ≈ 23.08%

Someone who meant to earn a 30% margin but applied a 30% markup would price the job about $900 lower than intended.

The calculator does not set prices from a markup. You can check a price like this by entering $9,100 as revenue and $7,000 as costs and reading the margin.

Keep Cost Categories Consistent

The result is only as useful as the categories behind it.

• Decide what counts as a direct cost and apply it the same way on every job.
• Enter labor at cost, not at billing rate. The Crew Labor Calculator can total it first.
• Enter rental at supplier cost. The Equipment Rental Calculator can total it first.
• Do not count the same cost in two fields.

If one job includes payroll burden in labor and another does not, their margins cannot be compared.

Gross Profit Is Not Net Profit

These are gross figures. Overhead such as office staff, rent, vehicles, marketing, and software is not included unless you deliberately enter it as a cost, and taxes are excluded unless entered as a cost.

A job can show a healthy gross margin while the company still loses money if overhead is larger than total gross profit. See Gross Profit vs. Net Profit in a Restoration Company and Overhead and Profit in Restoration for that distinction.

Zero Revenue and Losses

Some results are undefined or negative, and the calculator shows them as they are.

• If revenue is zero, margin cannot be calculated, so it shows Unavailable.
• If total direct costs are zero, markup cannot be calculated, so it shows Unavailable.
• With positive revenue and costs, costs greater than revenue produce negative gross profit, margin, and markup.

Hypothetical example: $6,000 revenue and $7,000 direct costs gives a $1,000 loss, a margin of about −16.67%, and a markup of about −14.29%. A negative result is valid information, not an error.

Where This Fits

For tracking costs across water, fire, and mold jobs, see Job Costing for Water, Fire, and Mold Restoration Projects. For the company-wide view, see Restoration Business Profitability.

Check a Job

Enter revenue and direct costs in the Job Cost and Margin Calculator and use Copy Summary to paste gross profit, margin, and markup into your job review.

Frequently Asked Questions

What Is the Difference Between Margin and Markup?

Both start with gross profit. Margin divides it by revenue. Markup divides it by direct cost. A job with $10,000 revenue and $7,000 cost has a 30% margin and a 42.86% markup.

Does a 30% Markup Give a 30% Margin?

No. A 30% markup on $7,000 gives a $9,100 price and about a 23.08% margin.

Why Does the Calculator Show Margin as Unavailable?

Margin divides by revenue. When revenue is zero, the division is undefined, so no percentage can be shown.

Does Gross Margin Include Overhead?

No, unless you enter overhead as a cost. The calculator reports gross figures, which are not net profit.

Disclaimer

This article provides general business education, not accounting, tax, or financial advice. Hypothetical figures are illustrations, not target margins or industry benchmarks.