Small Business Profit Margin Calculator

This small business profit margin calculator allows you to estimate accurately and walk away with the maximum profit every time.

What is a small business profit margin calculator?
A Small Business Profit Margin Calculator helps you calculate the profit your business earns after covering all expenses like materials, labor, and operational costs. It ensures your pricing not only pays for these costs but also leaves room for growth. By accurately estimating expenses, it helps you set competitive yet profitable prices, giving you a clear view of your business’s financial health and long-term sustainability.

Who uses a small business profit margin calculator?
This calculator is ideal for small business owners, from seasoned entrepreneurs to those just launching their first venture. It’s also perfect for professionals who want to skip the tedious task of manually calculating profits from invoices, expenses, and sales. This tool provides a quick and easy way to determine profit margins, helping users save time and focus on growing their business.

Why use a profit margin calculator?
A profit margin calculator helps you quickly assess the profitability of each job by calculating your profit margin based on material costs, expenses, and charges. It highlights if you underestimated costs, overspent on materials, or if unexpected expenses reduced your profits. It provides insights into your team’s efficiency and whether they stayed within budget. By analyzing this data, you can refine future estimates, improve cost control, and enhance overall profitability, making it an essential tool for better financial management.

How do you calculate profit margin?
To calculate your profit margin, simply plug each job’s numbers into this handy formula:

[(Billable Revenue – (Cost Price + Overhead Expenses)) / Billable Revenue] × 100
Where, Cost Price = Labor Cost + Materials Cost

How do you calculate a job’s labor costs?
Use this simple formula to determine the labor costs for a completed job:

Total Labor Costs = Number of Employees on the Job × Hours to Complete Job × Hourly Pay

If you have more than one employee working on a job and they have different hourly wages, calculate each person’s labor cost by multiplying their hours worked by their hourly pay. Then add up all the results.

How do you calculate a job’s material costs?
Check all your receipts for materials and supplies related to the job. Add up the costs of everything you bought. Whether you had to pick up or order materials, or you took them from your inventory, simply tally up the prices your suppliers charged you for those specific items. Don’t forget to include your markup percentage for materials, if applicable.

If you didn’t use all of a particular material, you can calculate the value of the materials you wound up using for the job.

How do you calculate overhead expenses?
Here’s the simple formula for calculating overhead expenses for a completed job:

(All Monthly Expenses / Working Hours Each Month) x Hours to Complete the Job

Profit Margin Calculator Example

Let’s say the billable revenue for a specific job is $4,000, while the total cost price for the job is $1,000 and the overhead expenses for the job total $1,000.
In that case, the formula used to calculate the profit margin by the calculator is:
[(4,000 – (1,000 + 1,000)) / 4,000] × 100 = 50%