Profit margin calculator

How the math works

• Direct cost = labor hours × loaded labor rate + parts + other direct costs
• Gross margin = price − direct cost
• Allocated overhead = labor hours × overhead per billable hour
• Net margin = gross margin − allocated overhead
• Price for a target net margin = (direct cost + overhead) ÷ (1 − target %)

Getting honest inputs

Loaded labor rate is the hourly wage plus employer payroll taxes, workers' comp, benefits, and paid time off. For many shops it lands well above the wage itself.

Overhead per billable hour is your monthly overhead divided by the hours your techs actually bill in a month, not the hours they are on the clock. Drive time, callbacks, and shop time lower billable hours and raise this number.