Markup, margin and the walk-away price
Three numbers decide whether a job pays. Here is how BidJolt works each one out, with the vanity-swap example from the home page.
1. Direct cost
Everything the job itself uses: labour hours times your hourly cost, materials, equipment hire, subcontractors. Example: 10 hours at $55 plus $1,200 of materials = $1,750.00.
2. Contingency and overhead
Contingency is a cushion for what you cannot see yet (rot behind the tiles, a part that arrives broken): 5% of $1,750 = $87.50. Overhead is what keeps the business open whether or not this job happens (insurance, vehicle, phone, software, your office time): 10% of the cost so far = $183.75. Together that is your cost: $2,021.25.
3. Markup is not margin
Markup is added to cost: 20% of $2,021.25 = $404.25 profit. Margin is profit as a share of the price: $404.25 of $2,425.50 (before tax) = 16.67%. The same dollars, a smaller percentage, because the price is bigger than the cost.
| Markup | Margin |
|---|---|
| 10% | 9.09% |
| 15% | 13.04% |
| 20% | 16.67% |
| 25% | 20% |
| 30% | 23.08% |
| 40% | 28.57% |
| 50% | 33.33% |
| 100% | 50% |
If you want a 20% margin you need a 25% markup; for 30% margin, 42.86% markup. The formula: markup = margin / (1 - margin).
4. Tax
BidJolt applies the tax rate you type to material lines only, because that is the most common case for trade work. Rules differ by state and by job: check yours. BidJolt does not know your tax rules.
5. The walk-away price
Cost plus tax, with no profit: $2,117.25 in the example. Any price below it means the job costs you money. When a client pushes back, you can come down toward it, knowing exactly where the floor is.
6. Deposit
A share of the total due before work starts, often to pay for materials. BidJolt just does the arithmetic; deposit limits are set by some states and by your own policy.