How to Calculate Job Profit and Profit Margin

Revenue from a job does not tell you whether it was worth doing — profit does. Here is how to calculate it, and why margin and markup are not the same thing.

The formulas

Worked example

Revenue

$2,500

Materials

$800

Labor cost

$700

Other direct costs

$200

Total job costs

$800 + $700 + $200 = $1,700

Profit

$2,500 − $1,700 = $800

Profit margin

$800 / $2,500 × 100 = 32%

Profit is not the same as revenue

Revenue is everything the job brought in. Profit is what is left after job costs. A $2,500 job with $1,700 in costs only made $800 — treating the full $2,500 as available money would be a mistake.

Margin is not the same as markup

Margin measures profit relative to what the customer paid (revenue). Markup measures profit relative to what the job cost you.

Using the same job: margin is $800 / $2,500 × 100 = 32%, but markup is $800 / $1,700 × 100 ≈ 47%. Same job, two different numbers depending on which one you are asked for.

Profit vs. cash in the bank

Money sitting in your business account is not necessarily job profit — it can include unpaid bills, taxes you owe, or payment for a different job that has not been costed out yet. Job profit is specific to one job's revenue and costs.

Job-profit checklist

• List every direct cost tied to the job — materials, labor, other
• Add them up before comparing to revenue
• Profit = revenue − total job costs
• Margin = profit ÷ revenue × 100
• Do not confuse a healthy bank balance with a profitable job