Markup and gross margin
Markup and margin describe the same gross-profit dollars with different denominators. Markup is(selling price − cost) ÷ cost. Gross margin is(selling price − direct job cost) ÷ selling price. A target gross margin produces a selling price with cost ÷ (1 − target margin).
A margin of 100% or more is invalid, a negative cost or price is invalid, and a zero cost makes markup undefined. Gross profit is never labeled net profit. Use the markup and margin calculator to inspect a complete formula trace.
Fully burdened labor
Annual employment cost combines annual base wages, wage-based burdens entered by the user, fixed annual benefits, and bonuses. Productive available hours subtract entered PTO, holidays, training, meetings, and other nonbillable time from paid hours. Billable hours then apply the user's utilization assumption to productive available hours.
Cost per billable hour is total annual employment cost ÷ billable hours. A blended rate divides all included roles' employment cost by all included roles' billable hours. Excluded hours cannot exceed paid hours, utilization cannot exceed 100%, and zero billable hours produce an explanation rather than an infinite result. No payroll or regional burden rates are supplied by the product. Open the labor-rate calculator.
Overhead recovery and break-even
Monthly, quarterly, and annual overhead entries are normalized to annual amounts. Overhead per billable hour is annual overhead ÷ annual billable hours; overhead per job isannual overhead ÷ annual jobs. The hourly break-even rate adds direct labor cost per billable hour to overhead per billable hour.
A target operating-margin rate is break-even rate ÷ (1 − operating margin). Hours needed to cover overhead are undefined when the current rate does not contribute more than direct labor cost. Materials and subcontractors are excluded unless entered in revenue-target mode. Explore the overhead recovery calculator.
Change-order price
The direct change cost combines role hours at direct labor rates, materials after waste, subcontractors, equipment, mobilization, permits, disruption allowance, callback reserve, and other entered direct costs. Suggested pretax price istotal direct change cost ÷ (1 − target job gross margin).
The tool does not silently stack line-item markup with a whole-job margin, does not calculate tax, and does not create customer-facing legal terms. It identifies whether a rate came from the local profile or a manual override. Use the change-order builder.
Bid-to-actual variance
Category variance is actual − estimate, with direction labeled. Profit leakage isestimated profit − actual profit, and margin-point change isactual margin − estimated margin. When allocated overhead is excluded, outputs use gross profit and gross margin. When it is included, those outputs are explicitly relabeled operating profit and operating margin.
Diagnostic rules identify a possible driver; they do not assert causation. Review a job in the bid-to-actual analyzer.
Validation and sensitivity
Required, impossible, high-risk, soft-range, and cross-field checks run before a formula. Division by zero and impossible contribution states return a plain-language explanation. Sensitivity tables rerun the same formula across controlled changes—such as nearby margin, utilization, hours, material cost, overhead, or callback reserve—without replacing the user's saved inputs.