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Find out whether a commercial job actually made money, after real costs and overhead

A RocketLevel tool, backed by decades of experience in the trade. Plug in a job's revenue, its five direct-cost lines, and your overhead rate as a percent of revenue, and see gross margin, net profit, and net margin, with a plain read on whether the job was healthy, thin, at risk, or a loss. Use it job by job to learn which commercial work actually pays.

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What you enter

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What you enter. Eight cells. Pull these off the closed job file before you start.

• Job name. Optional. A label so you can line up several jobs side by side later.
• Contract or invoice value. What you billed, including approved supplements.
• Direct labor. Techs plus project manager (PM) time on this job, burdened. Wages, taxes, workers' comp.
• Equipment. Rental, or your own equipment allocated to the job.
• Materials and consumables. What you bought and used up on the job.
• Subcontractors. Every sub invoice tied to this job.
• Other direct costs. Travel, disposal, permits, anything else that exists only because this job existed.
• Overhead rate. Your overhead as a percent of revenue. See the note below; this one trips people up.

Those five cost lines are the direct costs. If a cost would have happened whether or not you took this job, it belongs in overhead, not here.

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How to read the result

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The read it gives: gross margin, net profit in dollars, and net margin as a percent of job revenue. Gross margin is revenue minus the five direct-cost lines, before any overhead comes out. Net margin is what survives after overhead. The two are often far apart, which is the point of running this. Every job lands in exactly one of four bands, scored on net margin.

• Healthy, net margin of 10% or higher. The job paid its own costs, carried its share of the office, and left something behind. Write down what made it work (the scope, the crew, the account, the schedule), then go find more of it.
• Thin, net margin at or above 5% but below 10%. You covered your costs and cleared overhead with very little left. Before you take another job like it, find the line that ate the margin. It is usually labor hours, sub pricing, or scope you performed and never billed.
• At risk, net margin at or above 0% but below 5%. Barely above break-even. The job made money on paper and almost nothing you can spend. At this margin one change order you performed and never billed, an extra week of drying, or a sub invoice that came in over the bid would have flipped it, so it may already be a loss once the last costs land. Treat it as a near miss rather than a win, and go find the line before you price the next one the same way.
• Loss, net margin below 0%. The job did not cover its direct costs plus overhead. Pull the file and find where it turned. Then decide whether to reprice that type of work or stop taking it.

The bands do not overlap and they leave no gaps. A job at exactly 10.0% is healthy, exactly 5.0% is thin, exactly 0% is at risk, and anything below 0% is a loss. The 10% and 5% lines are this calculator's own working thresholds. The 10% line proxies for enough cushion that one job going wrong does not erase the profit on the jobs around it. The 5% line marks the point where ordinary job-to-job variation is big enough to swallow the whole margin. If your business targets a different net margin, change it and apply the same number to every job so the comparison holds.

Keep the result with the job file. Record the job name, the net margin, the band, and the one cost line that moved it most. One job's margin tells you little. Sort twenty of them by band and you have the list of work you should be pricing differently or turning down.

Run it on your last few commercial jobs. The pattern tells you what to chase and what to stop.

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Overhead here is a percentage, not a dollar amount. The overhead cell wants your overhead as a share of revenue. On a $250,000 job at a 31% rate you enter 31, not $77,500. The calculator does the multiplication and applies the result to revenue. Enter a dollar figure in that cell and the answer is nonsense.

If you do not know your rate, take last year's total overhead (rent, office payroll, insurance, vehicles, software, marketing) and divide it by last year's total revenue. Then use that same rate on every job. A rate you change job to job destroys the comparison, which is the only reason to run this more than once.

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Worked example

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Worked example. A commercial water job that billed a quarter million.

• Revenue: $250,000
• Direct labor $75,000, equipment $20,000, materials $18,000, subcontractors $24,000, other direct $8,000
• Total direct cost: $145,000
• Gross margin: 250,000 − 145,000 = $105,000, or 42.0% of revenue
• Overhead at 31% of revenue: 0.31 × 250,000 = $77,500
• Net profit: 105,000 − 77,500 = $27,500
• Net margin: 27,500 ÷ 250,000 = 11.0%

At 11.0% the job clears the 10% line, so it reads healthy. Look at what happened in between. A 42% gross margin looked like a strong job, and overhead took roughly three quarters of it. That gap is why gross margin alone can mislead you about which commercial work is worth chasing.

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Run it on your own job

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Three ways to use this calculator

• On a computer: run it right below. Enter the seven numbers and the margins update as you type, along with the break-even overhead rate. The break-even overhead rate is the overhead percentage at which this job's net margin lands at exactly zero, which always equals its gross margin percentage. On the worked example it is 42.0%, so any overhead rate above 42% would have turned that job into a loss.
• On a phone, or to keep your numbers: make your own copy in Google Sheets.
• No Google account? Download it for Excel and open it in Excel or any spreadsheet app. </aside>

https://gem-resource-hub-calculators.nyc3.cdn.digitaloceanspaces.com/job-margin/index.html

Important: please read. This tool is provided free of charge by RocketLevel as a general, educational estimate and starting point only. The results are illustrative estimates based solely on the figures you enter; they are not a guarantee of any outcome, value, cost, or result, and they are not legal, financial, tax, accounting, insurance, or other professional advice. Using this tool does not create an attorney-client, advisory, or other professional relationship with RocketLevel. RocketLevel makes no representations or warranties of any kind, express or implied, regarding the accuracy, completeness, or suitability of this tool for your situation, and provides it "as is." You are solely responsible for verifying any figures and for consulting your own attorney, accountant, bookkeeper, CPA, or other qualified advisor before making any decision. To the fullest extent permitted by law, RocketLevel and its affiliates, officers, and employees disclaim all liability for any loss, damage, or claim arising from its use.

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Tools for this play. Related: the Is This Commercial Job Actually Making Money? A Job-Costing Walkthrough walkthrough, and the The Margin Math: Percentage vs. Dollars and Your Real Margin Is Lower Than You Think playbooks. Terms are in The Restoration Glossary.

Do it yourself or have it done. Running this calculator on your last few closed jobs is a job for you and your bookkeeper, and the repricing it points to stays in your shop. What it cannot give you is more commercial jobs to choose from once you know which kind pays. RocketLevel's inside sales team works that end, booking meetings with the property managers, facility directors and owners behind the work worth chasing.

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Part of the free GEM Resource Hub by RocketLevel Commercial. Playbooks and tools for running the whole restoration business, A to Z, while specializing in building commercial revenue you own. RocketLevel is a bolt-on inside sales team that strengthens your commercial pipeline. Explore more in the GEM Resource Hub. New here? About RocketLevel and what the system has produced. When you're ready, see what your market is worth or book a Commercial Growth Call.

How we source figures: every number in this library names its source or is labeled as RocketLevel's own working figure. Read the sourcing standard.

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