The fastest way to lose money on a job you “won” is mixing up markup and margin. A 30% markup is not a 30% margin. Price from cost, overhead, and the profit you need — not from what a neighbor charged last spring or what the homeowner says “sounds fair.”
If materials and labor cost $400 and you want a 40% margin: price = 400 ÷ 0.60 = $667. Profit is $267. That same profit is a 67% markup on cost (267 ÷ 400). If you instead add a 40% markup: 400 × 1.40 = $560 — only about a 29% margin. Saying “I mark up 40%” while hoping for a 40% margin is how busy shops stay broke.
Quick conversion: margin = markup ÷ (1 + markup). A 50% markup is a 33% margin. A 100% markup is a 50% margin.
Sum those into job cost. Apply your target margin to get the quote price. If the client’s budget sits below your floor, change the scope or walk — do not silently delete your profit to “stay busy.”
Fixed prices win more residential work and reward efficiency. Use your hourly rate as the floor when you assemble the fixed price, not as the whole sales strategy. Small diagnostic visits often need a trip fee or a one- to two-hour minimum so you are not crossing town for a $40 outlet cover. Write minimums into the quote template so you are not inventing policy in the driveway.
One take-it-or-leave-it number invites pure price shopping. Three packages let the client choose value. The middle option is where many homeowners land, and you stop competing only on the cheapest path. Build each option from real cost; do not invent the top tier as a fake anchor.
Job Profit & Markup Pro ($19) adds saved jobs, package options, and a branded quote PDF. Pair it with the live Quick Quote Calculator ($19) when you want client-facing options fast.
Liability insurance, a reliable vehicle, fuel, phones, payment processing fees, warranty callbacks, and empty calendar days are all part of job cost even when they are not on the material list. If your overhead is roughly 20–30% of revenue, a job that only “covers materials and your time” at a casual rate may still lose money. Either raise the rate or apply an overhead line when you price.
Payment processing fees of 2–3% are real. If clients pay by card, build that into prices or offer a cash/check discount that still clears your margin floor.
When in doubt, write the number that still lets you say yes to warranty work with a straight face. A job that only works if nothing goes wrong is priced wrong.
Markup is profit divided by cost. Margin is profit divided by the selling price. A 30% markup is only about a 23% margin.
Many solo pros target 30–50% gross margin after materials and direct labor, before owner salary — but your overhead and tax situation matter more than a rule of thumb.
Yes. Time spent buying, hauling, and warrantying materials is real cost. 15–25% material markup is common; specialty items may be higher.
Fixed prices win more residential jobs and reward efficiency. Use your hourly rate as the floor when you build the fixed price.