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Labor cost includes burdened rate: $47.25/hr. Overhead is applied to labor + materials.
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What is job costing for contractors?
Job costing is the process of tracking all costs — labor, materials, subcontractors, equipment, and overhead — against a specific job or project so you know exactly how much profit each job generates. For small contractors, accurate job costing is the difference between growing a profitable business and slowly leaking money on every project.
How do I calculate labor burden rate?
Labor burden is the additional cost on top of base wages. To calculate it, add your payroll taxes (FICA, FUTA, SUTA — typically 12%), workers' comp insurance (5–15% depending on trade), general liability insurance (3%), and benefits (health, PTO, retirement — around 5%). The total as a percentage of base wage is your labor burden rate. Multiply base wage × (1 + burden%) to get your fully loaded labor cost per hour.
What is a good profit margin for a contractor?
A healthy net profit margin for most contractors is 15–25%. Specialty trades like electrical and plumbing tend to run 20–30%, while general contracting and remodeling often land at 10–20%. Anything consistently below 10% suggests pricing, overhead allocation, or labor cost problems that need attention.
What is the difference between markup and margin?
Markup is profit expressed as a percentage of cost: (Price - Cost) / Cost. Margin is profit expressed as a percentage of the selling price: (Price - Cost) / Price. A 25% markup yields a 20% margin, not 25%. Confusing the two is one of the most common — and expensive — mistakes contractors make when pricing jobs and change orders.