Free tool
Profit margin calculator
By Umair Nawaz, founder of Lirevon Updated How we test tools
Enter a year of revenue, job costs and overhead from your own books. See your gross and net margin, the price you need for a target margin, and what a few margin points are worth to you in a year. The defaults are only examples, so change them.
1. Your year
Your margins, estimated
Gross margin
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Net margin
–
Gross profit
–
Net profit
–
Your markup on job costs
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2. Price to hit a margin
Price to charge
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Profit on the job
–
Same as a markup of
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3. What margin points are worth to you
Same yearly revenue, different net margin. Estimate only.
| Change | Net margin | Yearly profit | vs now |
|---|
Markup vs margin, in plain words
- Gross margin = (revenue − job costs) ÷ revenue.
- Net margin = (revenue − job costs − overhead) ÷ revenue.
- Markup = (price − cost) ÷ cost. It is measured on cost, so it is always a bigger number than margin for the same job.
- Price for a margin = cost ÷ (1 − margin). Adding 25% to cost gives a 20% margin, not 25%.
- The table = revenue × (your net margin ± 5, 10 or 15 points). It assumes the same revenue, so the change comes from better prices or lower costs.
| Markup | Margin |
|---|---|
| 10% | 9.1% |
| 20% | 16.7% |
| 25% | 20% |
| 33.3% | 25% |
| 50% | 33.3% |
| 100% | 50% |
Questions about margin and markup
What is the difference between markup and margin?
Markup is profit divided by cost. Margin is profit divided by price. If a job costs $1,000 and you charge $1,500, the markup is 50% ($500 ÷ $1,000) and the margin is 33% ($500 ÷ $1,500). Mixing them up is one of the most common pricing mistakes.
How do I turn a markup into a margin?
Margin = markup ÷ (1 + markup). A 25% markup is 0.25 ÷ 1.25 = 20% margin. To go the other way, markup = margin ÷ (1 − margin). A 20% margin needs a 25% markup.
What is gross margin for a tree company?
It is revenue minus direct job costs (crew wages and taxes, equipment hours, fuel, dump fees, rentals, subcontractors), divided by revenue. It tells you how much each job leaves to pay overhead and profit.
What is net margin?
It is what is left after direct job costs and overhead (office, insurance not in job costs, software, phones, marketing, owner salary if not in job costs), divided by revenue. It is your real profit as a share of every dollar you bill.
What counts as overhead?
Any cost you pay even if you do no jobs that week: office or yard rent, office staff, insurance not tied to a crew, phones, software, accounting, advertising and loan payments not tied to one machine. Put it in once, as a yearly total.
What margin should a tree service aim for?
We do not publish a target, because it depends on your market, your equipment and your risk. Use your own books: work out your current net margin with this tool, then use the table to see what a few more points would mean for you in a year.
How does the "price to hit a margin" box work?
Enter the full cost of a job, including its share of overhead, and the margin you want. The tool divides the cost by one minus the margin. The result is the price where that margin is left after the cost is paid.
Is anything I type sent to Lirevon?
No. The math runs in your browser. Your numbers are only kept in this browser on this device so the form is filled in next time.
Plain meanings: gross margin, net margin, overhead and owner-operators.
Margin is also about lost jobs
Your overhead is paid either way. Book more jobs.
More jobs on the same overhead lift your net margin. Lirevon's Never-Miss-A-Job System texts back missed calls, answers with an AI receptionist and follows up every lead for tree companies.