Free Profit Margin Calculator

Your profit margin is the percentage of income that your business keeps after other expenses, like materials and labor, are paid for. When you apply this percentage to a specific job, you’ll see your profit for that job as a dollar amount. The higher your percentage, the more profitable your business will be.

There are a few different types of profit margins:

• Gross profit margin: How much money your business keeps after subtracting the cost of labor and materials.
• Operating profit margin: What you keep after expenses, but before taxes or interest.
• Net profit margin: Percentage of income that you keep after all expenses, like labor, materials, overhead, taxes, and interest are subtracted.

A “good” net profit margin percentage is normally 10–20% of your job costs. However, this percentage might vary depending on your industry. It’s a good idea to calculate profit margins and compare them to industry benchmarks and competitors to see how you stack up.

This gross profit margin calculator shows you how profitable a job is, based on how much it costs to perform the job and how much you’re charging your customer. When you use the calculator after a job is finished, you can make sure that your team is working efficiently, you’re staying within budget, and your business is profitable. Or, use it while you’re pricing services to double-check that you’re charging an amount that profits your business.

Profit margin calculators are perfect for brand-new entrepreneurs or for experienced business owners who don’t want to manually add up receipts, time sheets, and invoices. Try this fast and easy way to calculate your profit margin—without having to do the math yourself.

Our gross profit margin calculator is just one of our free tools. Together, these tools can help you store client information, convert estimates to invoices, and get paid for your work. Bookmark this page and use it to check your profit margins after every job.

A profit margin calculator makes it easy to calculate how much money your business keeps after costs and expenses. Here’s how a gross profit calculator can help you:

• Quickly add up the various components of a job
• Make sure every job is profitable
• See if you’re over- or underestimating costs and expenses
• Prevent errors that affect your accounting

With a gross profit margin calculator, it takes only seconds to find out how profitable a job was. Easily see if you underestimated labor hours, if material costs went over budget, or if rising expenses are cutting into your profit margins.

To set accurate, fair prices that reflect your hard work and time, try our free service price calculator.

What are the key metrics used in a profit margin calculator?
A profit margin calculator typically uses the following key metrics:

• Service price: What you charge customers for the job (this is what your client sees on their invoice).
• Labor costs: The total cost of workers needed to complete the job, based on the number of workers, hours worked, and their average hourly rate.
• Material costs: The total cost for tools, materials, and equipment used.
• Overhead expenses: Expenses that keep your business running, like office rent, uniforms, permits, field service software, and so forth.

You can input these metrics into our gross profit margin calculator to see if your service business is undercharging, breaking even, or making a healthy profit.

You can calculate profit margins using this simple formula:

Profit margin percentage = [ (Service price – Cost) / Service price ] x 100 

To use this formula, you’ll want to understand the following terms:

• Service price: What you charge the customer for the job (the total on the invoice).
• Cost: What it costs you to do the job, including labor, material, and overhead costs.

For example, if you charge $500 for a service job and it costs you $350 to complete, your profit margin would be 30%—meaning 30% (or $150) of the job is profit.

You can run this calculation yourself using the formula above, or save time by using our free profit margin calculator to get your numbers quickly.

Calculate the labor costs for a completed job using this formula:

Labor costs = Number of employees on the job x Hours to complete job x Hourly pay

If the job requires multiple employees with different hourly wages, multiply each person’s hours by their hourly pay and add up the results.

As an example, let’s say Employee A worked 20 hours at $18/hour, and Employee B worked 24 hours at $20/hour. Employee A’s labor cost is $360 and Employee B’s is $480, bringing your total labor costs for the job to $840.

Make labor cost tracking easier by using time and job tracking software to record employee hours and store timesheets.

Go through all of your material and supply receipts for the job and add up your purchases to determine the total material cost.

If you special-ordered materials or used up your inventory for a specific product, add up your suppliers’ listed prices for those items. Remember to include your markup percentage for materials, if you have one.

If you only used part of a particular material, you can figure out the value of the material the job used up. For example, if you used up half a bag of fertilizer, divide the value of the fertilizer by half and charge the client accordingly.

Want to make this process fast and easy? Use expense tracking software to log expenses, assign them to jobs, and snap and attach receipt photos.

Here’s the formula for calculating overhead expenses for a job:

Overhead costs = (All monthly expenses / Working hours each month) x Hours to complete the job

Start by adding up all your monthly operating costs, like rent, marketing costs, business insurance, cell phone or data plans, or business management software. If you have annual expenses like vehicle registration, add them up and divide by 12 to get a monthly total.

Next, divide your total monthly overhead costs by the number of workable hours each month. This tells you your hourly expenses. Multiply this amount by the number of job hours to see how much of your job earnings will go toward overhead.

Let’s say you have $2,500 in monthly expenses. Your business also has two full-time employees working a combined total of 320 hours each month. This means that for every hour of work, your business has $7.81 in overhead costs. Multiply that amount by the 44 hours it took to complete a job, and you’ll see that the job cost you $343.64 in overhead.

Gross profit margin shows how much money is left after paying for the direct costs of a job, like labor and materials. These are often called cost of goods sold (COGS). 

Net profit margin is your true bottom line. It’s the percentage of money you keep after all expenses are deducted, including COGS, overhead, operating costs, taxes, discounts, and interest.

Think of it like this—your gross profit margin tells you how profitable your core work is (like materials and labor), while net profit margin shows how profitable your entire business is after all other costs are factored in.

There’s a big difference between revenue and profit.

Revenue is the money your business brings in by providing services. Once you receive it, this amount is divided up to pay for labor costs, materials, and business expenses.

Profit is the money your business gets to keep after you’ve paid for all those costs and expenses. This is just a portion of your revenue.

Markup is the extra percentage you charge for services, beyond your normal costs and expenses, in order to profit from each job.

Profit margin is the percentage of the overall job value that your business gets to keep after subtracting all of your expenses.

Let’s say your labor, materials, and overhead for a job add up to $1,500. Your 30% markup brings the total job value to $1,850, giving you $350 in profit at a margin of 18.92%.

READ MORE: Markup calculation guide for small business owners

Your net profit margin can change based on several factors, some within your control, and some not. Here’s what to watch for:

• Pricing strategy – How you price your services should cover your expenses and leave room for profit. Review your rates regularly to ensure they cover your costs and keep you competitive in your market.
• Job costing – Track material and labor costs closely. Even small cost increases can quietly eat into your profits.
• Seasonality – In seasonal industries like lawn care or snow care, revenue and demand will dip during off-seasons. Plan your pricing and marketing around these slower periods to stay profitable year-round.
• Fluctuating expenses – Material, fuel, or subcontractor costs can rise and fall unexpectedly. Regularly adjust your budget and pricing to stay ahead.
• Your industry – Some industries naturally have more overhead, so margins can vary. For example, HVAC has higher equipment and labor costs than house cleaning.
• Services you offer – Premium services often bring in better profit margins, while basic services may require you to compete more on price, lowering your margins.
• Your customers – Price-sensitive clients may limit your ability to charge what you’re worth. Customers looking for high-end or specialized services are usually willing to pay more, increasing your margins.
• Market conditions – If you have few to no competitors, you may be able to charge more. Crowded markets may require you to lower prices or offer more value to boost profits.

By staying proactive in these areas, you can protect your margins, make smarter financial decisions, and position your service business for steady, long-term growth.

If your profit margin isn’t as high as you’d like, there are several ways to improve it:

• Increase prices to bring in more money for the business
• Lower overhead costs to be more efficient with the money you’re already earning
• Improve your team’s efficiency so you’re doing more work in the same time
• Advertise your business to bring in more paying customers
• Upsell clients on new or added services that will benefit them
• Increase revenue from new customers or existing clients

Pro Tip: Not sure where to start with marketing? Try designing your own marketing materials in Looka.

When you’re done using our gross margin calculator, use our free invoice template to create a service invoice for your clients.

You can also upload your job information into invoicing software like Jobber. This makes it easy to write an invoice using your desktop or mobile app.

Here’s what you can do with Jobber:

• Accept new work requests through your website or Local Services Ads
• Create quick estimates and convert them into jobs
• Store customer information and communicate with clients via email and SMS
• Schedule teams, route work quickly, track time, and log expenses
• Convert completed jobs into invoices and send them to clients, fast
• Send automated invoice follow-ups using professional templates
• Take payment in person or online with credit card processing
• Use built-in reporting to see how your business is doing

Learn more about how Jobber can help you create invoices and get paid faster.