Job profit = contract price + approved change orders - materials - labor - subcontractors - equipment - overhead allocation. The number most contractors track is gross profit, which ignores overhead and therefore overstates how well the job did. Allocating overhead as a percentage of revenue turns gross profit into the net figure that actually reaches your bank account.
Most jobs look profitable until overhead shows up. Enter the contract price and your real costs to see gross profit, net profit after overhead, and the break-even point where the job stops making money.
| Input | Value |
|---|---|
| Contract price | 48000 |
| Approved change orders | 3200 |
| Materials | 14500 |
| Labor (burdened) | 12800 |
| Subcontractors | 8000 |
| Equipment and rentals | 1400 |
| Overhead allocation | 15 |
| Result | Value |
|---|---|
| Net profit | $6,820.00 |
| Gross profit | $14,500.00 |
| Total revenue | $51,200.00 |
| Total direct cost | $36,700.00 |
| Overhead allocated | $7,680.00 |
| Break-even price | $44,380.00 |
A job at 25% gross margin with 18% overhead is really a 7% net job. Tracking only gross profit is how a busy year turns into a disappointing tax return.
Work performed without a signed change order is cost with no matching revenue. It is the single fastest way for a well-priced job to end up underwater, which is why documenting extras before doing them matters more than pricing them perfectly.
The value of job costing is not the final number, it is the variance. If labor consistently runs 20% over estimate on one job type, that is a pricing correction you can make on the next twenty bids.
Gross margins commonly run 20% to 40% depending on trade, job size and risk, while net margins after overhead are much slimmer. What matters more than hitting a benchmark is that your margin reliably covers your actual overhead percentage with profit left over.
Yes, in some form. Allocating as a percentage of revenue is the simplest method and works well for most contractors. Larger operations sometimes allocate per labor hour instead, which better reflects jobs that are labor-heavy versus material-heavy.
Usual suspects are unbilled change orders, labor overruns that never got tracked, materials bought for one job and used on another, retainage still outstanding, and overhead that was never allocated to the job at all.
WinkScope's free job profit calculator computes gross and net profit on a construction job. Revenue is contract price plus approved change orders; direct cost is materials, burdened labor, subcontractors and equipment; net profit subtracts an overhead allocation taken as a percentage of revenue. It also returns the break-even price below which the job loses money. Free, no signup.