How to calculate profit on a contractor job
Calculate true profit, margin, and hourly return on a contractor job using collected revenue and every direct job cost.
In short
Job profit is the revenue you actually collected minus every direct cost required to complete that job—including a fair cost for your own labour. Divide that profit by revenue to get margin, or by total crew hours to see the job's effective hourly return.
Start with the version of profit you need
A contractor can calculate the same job two useful ways. Cash profit uses what the customer has actually paid. Projected profit uses the full quoted amount. Keeping them separate stops a collection problem from looking like a pricing problem.
Use cash profit when you want to know what the job has produced so far. Use projected profit when you want to judge whether the original price was strong enough, assuming the customer pays the full quote.
Cash profit
amount collected − total direct job costs
Projected profit replaces amount collected with the full quoted amount.
Count every direct job cost
Materials and helper wages are obvious. The costs most likely to disappear are the owner's time, travel, card fees, disposal, permits, rentals, subcontractors, and callback work. If a cost happened because you took the job, it belongs in the job calculation.
- Owner labour: hours worked × the hourly cost you assign to your time
- Helper labour: each helper's hours × their true hourly cost
- Materials and consumables used on the job
- Travel, fuel, parking, tolls, and job-specific delivery
- Payment processing fees, permits, rentals, disposal, and subcontractors
- Callback labour and replacement materials caused by the original job
A worked contractor example
Suppose a water-heater replacement was quoted and collected at $680. You spent three hours on it and value your labour at $45 per hour. Materials were $185, travel was $22, and the card fee was $19.72.
| Line | Calculation | Amount |
|---|---|---|
| Collected revenue | Customer payment | $680.00 |
| Owner labour | 3 hours × $45 | $135.00 |
| Materials | Recorded cost | $185.00 |
| Travel | Recorded cost | $22.00 |
| Card fee | Recorded cost | $19.72 |
| Total direct cost | All costs added | $361.72 |
| Cash profit | $680 − $361.72 | $318.28 |
Turn profit into margin and hourly return
The example job produced a 46.8% cash margin: $318.28 divided by $680. It also produced about $106.09 of profit per crew hour: $318.28 divided by three total human hours.
Margin helps compare jobs of different sizes. Effective hourly return helps compare jobs that consume different amounts of time. A large dollar profit can still be a weak job if it occupied several people for several days.
Profit margin
profit ÷ revenue × 100
Use collected revenue for cash margin and quoted revenue for projected margin.
Use the result to price the next job
One job is a clue, not a trend. Record the same numbers consistently, then compare similar work. If water-heater jobs repeatedly lose margin to supply runs or card fees, the next quote can include room for those costs instead of relying on memory.
Job profitability is an operating calculation, not a replacement for bookkeeping, tax, or financial advice. Your accountant still decides how costs and revenue belong in the books.
Calculate cash and projected job profit for free.