Core terms
These definitions are the product contract for calculator labels, formula traces, exports, print views, diagnostics, and editorial examples.
| Term | Definition | Common confusion |
|---|---|---|
| Direct job cost | A cost attributable to a specific job, such as field labor, materials, or a subcontractor. | It is not the same as overhead, which supports the business across jobs. |
| Labor burden | Employer cost beyond base wages plus the effect of paid but nonbillable time. User-entered examples include payroll taxes, workers' compensation, benefits, PTO, training, and meetings. | A burdened paid-hour cost is not the same as cost per billable hour. |
| Overhead | Indirect business cost not assigned directly to one job, such as office payroll, rent, insurance, software, or professional fees. | Do not count an item in both direct cost or labor burden and overhead. |
| Markup | (Selling price − cost) ÷ cost. | Markup uses cost as its denominator; gross margin uses selling price. |
| Gross profit | Selling price minus direct job cost. | Gross profit is not net profit and does not necessarily include overhead. |
| Gross margin | Gross profit ÷ selling price. | A 40% markup does not produce a 40% gross margin. |
| Operating profit | Revenue minus direct job cost minus allocated overhead. | Use this label only when overhead is included in the selected cost basis. |
| Operating margin | Operating profit ÷ revenue. | It cannot be substituted for gross margin without changing the cost basis. |
| Break-even price | The price at which the selected cost basis is recovered with zero profit. | Break-even depends on which direct costs and overhead are included. |
| Billable utilization | Billable hours divided by productive available hours, as defined by the user. | It is not billable hours divided by every paid hour unless the inputs define it that way. |
| Estimate | A planned value used before or during the work. | An estimate is not evidence of the recorded final cost. |
| Actual | A recorded value after or during job execution. | Actual revenue can include approved changes and may differ from collected cash. |
| Variance | Actual minus estimate, with the direction clearly labeled. | A positive cost variance means cost ran over the estimate; context determines whether positive is favorable. |
Follow a term into a tool
- Compare markup and gross margin in the markup and margin calculator.
- Turn wages and paid time into billable-hour cost in the labor burden calculator.
- Allocate overhead and calculate break-even in the overhead recovery calculator.
- Compare estimate, actual, and variance in the bid-to-actual analyzer.
When a term appears wrong
Labels are part of formula accuracy. Send a note through the correction page if a tool, export, or guide conflates markup, gross margin, or operating margin.