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Tool Belt Calc

Business

Job Costing Calculator

Build a bid price from costs, overhead and target margin.

Your measurementsEvery assumption editable01

What the hours cost you including burden, not what you bill.

Your annual overhead spread across direct job costs.

A margin, not a markup — the calculator converts.

Bid priceCalculated live02

Result

$9689.88bid price

$8236.4 to break even — $1453.48 profit

Materials
$3500
Labor60 hr at $38
$2280
Subcontractors
$1200
Direct cost
$6980
Overhead recovery18% of direct cost
$1256.4
Break-even
$8236.4
Bid price15% net margin
$9689.88
Implied markup on direct cost
38.82%

Price is derived by dividing by one minus the margin, not by multiplying by one plus it. Adding 15% to break-even gives a 13% margin, not 15 — the same markup-versus-margin trap, applied to a whole job.

Overhead recovery is the line most small contractors omit entirely, and omitting it means every job quietly runs at a loss against the true cost of being in business. Divide your annual overhead by your annual direct costs to find your own percentage rather than using the default.

The labor rate here is what hours cost you — wages plus payroll tax, insurance and any burden — not what you bill. Confusing the two removes the profit from the job before you have started it.

Direct costs, then overhead recovery, then margin — in that order. The overhead line is the one most small contractors leave out entirely, and omitting it means every job quietly runs at a loss against the true cost of being in business.

Why use this tool?What it does differently03

Why use this tool?

Overhead recovery included

The line most bids omit, which is why busy contractors can still lose money.

Margin done correctly

Divided by one minus the margin, not multiplied by one plus it.

Break-even shown

The number below which the job costs you money to do.

Implied markup given

So you can sanity-check against how you normally price.

How this worksThe method04

How this job costing calculator works

Materials, labor and subcontractors give direct cost. Overhead recovery is applied as a percentage of that, giving break-even. The bid price is break-even divided by one minus the target margin.

That division is the important detail. Adding 15% to break-even yields a 13% margin, not 15 — the same markup-versus-margin trap applied to an entire job. Dividing gets you the margin you actually asked for.

The labor rate here is what hours cost you, including payroll tax, insurance and any burden — not what you bill. Confusing the two removes the profit before the job has started.

How to use itStep by step05

How to use it

  1. Step 1: Total your direct costs

    Materials, labor hours at your cost rate, and subcontractors.

  2. Step 2: Set overhead recovery

    Your annual overhead divided by your annual direct costs. Work out your own rather than using the default.

  3. Step 3: Set a target margin

    As a margin, not a markup. The calculator handles the conversion.

  4. Step 4: Compare against break-even

    Any discount you offer comes straight out of the gap between the two.

Example usageWorked figures06

Example usage

A mid-size job
$3,500 materials, 60 hours at $38, $1,200 subs: $6,980 direct. Add 18% overhead for $8,236 break-even, then a 15% margin gives a $9,689.88 bid with $1,453.48 profit.
The implied markup
That bid is a 38.82% markup on direct cost — useful for checking against how you normally price by feel.
Skipping overhead
Omit the 18% and the bid drops to $8,211.76. It looks like a 15% margin and is actually a loss against the real cost of running the business.
Frequently asked questionsCommon questions07

Frequently asked questions

How do I price a construction job?

Total direct costs, add overhead recovery, then divide by one minus your target margin. Skipping the overhead step is the commonest way a bid ends up below true cost.

What is overhead recovery?

The share of your annual fixed costs each job must carry. Divide annual overhead by annual direct costs to find your own percentage — it is usually 15 to 25 per cent.

Why divide by one minus the margin?

Because a margin is a share of the price, not of the cost. Adding 15% to break-even gives a 13% margin; dividing by 0.85 gives the 15% you asked for.

Should the labor rate be what I charge?

No — what it costs you, including payroll tax, insurance and burden. Using your billing rate as a cost double-counts profit and hides losses.

How much should I discount to win work?

Anything you discount comes out of the gap between bid and break-even. Knowing that gap tells you exactly how much room you have before the job costs you money.

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