Gross profit margin on a building job

Gross profit = job revenue (including approved variations) minus direct job costs: labour at internal cost, materials, subcontractors and other direct costs. Gross profit margin = gross profit divided by revenue.

A $100,000 job with $72,000 of direct cost produces $28,000 gross profit and a 28% gross profit margin.

Markup is added to cost; margin is measured against price. A 30% markup on $72,000 of cost gives a price of $93,600 and a margin of about 23% — not 30%. Quote on markup, measure on margin, and know which one you're looking at.

Gross profit margin on a job covers direct costs only. Your business overhead is recovered through your charge-out rate, not by loading one job with the whole year's overheads. MARGIN keeps job performance and business performance separate for exactly this reason.

There is no single correct figure — it depends on your work type, risk and overhead structure. What matters is knowing your own numbers across completed jobs and whether they're trending up or down. MARGIN shows that from your own back costed jobs rather than a benchmark you can't verify.