A job price needs a consistent cost basis. Markup on cost and margin on the selling price are different percentages, even when the labour, materials and overhead are identical.
Job pricing breakdown
Selling price before tax USD
- Labour
- --
- Materials
- --
- Subcontractors
- --
- Other direct costs
- --
- Direct cost subtotal
- --
- Allocated overhead
- --
- Total estimated cost
- --
- Estimated profit after entered costs
- --
- Markup on cost
- --
- Margin on selling price
- --
Estimate only. Excludes sales tax and costs not entered. Currency selection changes labels, not exchange rates. Figures are not saved or submitted.
Download the itemized job estimate worksheet
Markup versus margin: the same job, two prices
Markup measures the amount above cost as a percentage of that cost. Margin measures the same difference as a percentage of the selling price. Intuit’s formula explanation distinguishes the two denominators. Neither percentage below is a recommended target for your business.
Our fictional job has 40 total labour hours at a loaded cost of $35 per hour ($1,400), $2,000 of materials, $500 of subcontractor costs and $100 of other direct costs. The direct subtotal is $4,000. With $400 of allocated overhead, the stated cost basis is $4,400. These are invented test amounts, not market rates. Use one currency throughout; these numbers do not imply equivalent USD and CAD purchasing power.
- 20% markup on cost
- $4,400 x 1.20 = $5,280 before tax. The $880 difference is 20% of cost, but approximately 16.67% of the selling price.
- 20% target margin on selling price
- $4,400 / (1 – 0.20) = $5,500 before tax. The $1,100 difference is 20% of the selling price and 25% of cost.
The $220 price difference comes from the percentage basis, not additional work. The remainder is only after the stated costs: it is not guaranteed profit, accounting gross margin or after-tax income. Unentered expenses, discounts and actual overruns change the result.
A consistent cost basis matters
- Person-hours are not elapsed hours. Two people working 20 hours each total 40 labour hours. A charge-out hourly rate is not the same as a loaded labour cost.
- Keep overhead from being counted twice. Costs already included in the loaded labour rate should not be added again as allocated overhead.
- Separate the price from the scope. An issued quote also needs quantities, exclusions and approval terms. Sales tax and costs outside the stated basis are not part of this example.
For itemized scope and quantities, use the free job estimate worksheet. For selecting a quoting or takeoff system, read the estimating software guide. Subscription and implementation budgets belong in the separate software cost calculator, not a customer job quote.