Bid Calculator

The most expensive mistake in contracting is confusing margin with markup. If your cost is $10,000 and you add a 25 percent markup, your bid is $12,500 and your gross margin is 20 percent, not 25 percent. Margin and markup are related but different, and pricing for the wrong one costs money on every job.

The correct formula for a target margin: price = cost / (1 - margin). For 30 percent margin on $10,000 cost: price = 10,000 / 0.70 = $14,286. Markup on that job is 42.9 percent, not 30 percent.

This calculator does the conversion. Enter the cost and target gross margin, and it returns the bid price plus the equivalent markup percent. Use it to check any bid before it goes to the customer.

Every remodel, dig, and demo job has unknowns. Rotten sub-floor under the tile. Roots in the trench. Two extra hours of framing when the wall was not square. A 3 to 10 percent contingency built into cost before margin covers the small stuff without triggering a change order for every $200 surprise.

For scoped-and-signed jobs (new construction, well-defined installs) 3 percent is enough. For remodels 5 to 8 percent is normal. For historic renovations and problem projects, 10 to 15 percent is not unreasonable. Any surprise larger than the contingency should trigger a written change order.

Residential remodel and custom work typically targets 30 to 40 percent gross margin, which supports 15 to 25 percent net margin after overhead. Simpler tract work runs 20 to 25 percent gross.

Specialty trades (electrical service, HVAC replacement, plumbing repair) target 40 to 55 percent gross on service and 25 to 35 percent on new install work. Emergency and after-hours work often runs at 60 to 80 percent gross.

New construction subcontracting (framing, drywall, roofing) runs 15 to 25 percent gross because volume and scheduled cash flow compensate for the thin margin.

If your gross margin is under 20 percent on residential work, either your cost estimating is off or your pricing is too low for the market. Both are fixable, but not until you know which one.

Every point of price given away is a point of pure profit given away. A 5 percent discount on a job priced at 30 percent margin drops the margin to about 26 percent. Give away 5 percent twice and the margin is 21 percent. A few discounted jobs a month is why a contractor can be busy all year and still not make money.

Never discount to win a job. If you need to cut, cut scope, not price. If the customer wants to save money, offer a smaller version of the job at the correct margin, not the same job at a lower margin.

Winning the wrong job at the wrong price is worse than losing it. Peak Local Leads builds local trade sites for one contractor per market and puts the phone in the hands of one company. Free week of calls, flat monthly after.