image of profit margin calculator for service businesses

Let’s get real––you’re always grinding hard to grow your service business. Top of mind is the bottom line. Increasing profits is critical to your growth and success.

Entrepreneurs often focus on top line growth: more trucks, more equipment, more jobs— you know the drill.

But top line growth is a dangerous game if you’re letting unprofitable jobs eat up your time, resources, and energy.

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Even if your sales are growing, your expenses (like rent, employees, equipment, etc.) may be growing too.

The key is to take on profitable jobs, increase revenue, and increase profit margins. But, how do you do that?

You can increase profit by pulling different levers in your finances and developing new strategies for your business.

  • For example, you can:
  • Charge more for your jobs
  • Lower overhead expenses
  • Increase staff efficiency
  • Identify your high-value, low-cost services
  • Or best of all, understand your margins

Before you start cutting back and optimizing your routes or your pricing, let’s focus on your numbers first.

Numbers are key. If you don’t know what they are right now then drop everything and sort them out right now.

Phil Sarros, Director of Education at Steel Toe University and seasoned Landscaping entrepreneur, stands behind this.

You should check your cash flow at least once a week to make sure you’re staying on track.

Phil checks his even more often:

“cash flow is something I measure probably twice a week,” Phil explains.

With this pricing, margin, and cost calculator tool, you’ll be able to understand all your numbers down to a “T.”

Get started below so you can get more growth and profits out of your business.

Pricing, Cost, and Markup Profit Margin Calculator: Designed for Service Businesses

Fill in your information to get access to the calculator webpage, then save it to your bookmarks.

What you get with this free calculator:

Three easy calculations to help you price more profitable jobs, stay on budget, and include markup in your prices.

Pricing Calculator

Use this before a job. The Pricing Calculator helps you determine what to price a job.

It also shows Projected Profit and Markup. If you understand your costs and have a target Profit Margin that you’re trying to hit for the job, then you’ll love this tool.

Cost Budget Calculator

Use this before a job. The Cost Budget Calculator helps you determine the target cost budget to keep your job costs under.

This is helpful if you know what you aim to price the job at, and understand the target Profit Margin you’re trying to hit for the job. This calculator also shows Projected Profit and Markup.

Markup Calculator

Use this after a job. The Markup Calculator helps you determine the Profit Margin, Profit dollar amounts, and job Markup after the real costs (like materials, and labor) and price are added in.

image of a service business pricing calculator
Here’s a sneak peek at what the calculator looks like. Fill out the form above to get access.

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How to calculate pricing for your service business

Your pricing calculations are how you wish to price your services in a dollar amount. This is the price you’ll charge your clients. This number is based on your costs and your desired profit margin for your services.

The price should include the sum of various costs such as:

  • Labor cost
  • Materials cost
  • Overhead expenses
  • Margin

Here’s a quick calculation:

Pricing = Cost + (Cost x Markup%)

Tip: You could further breakdown overhead by fixed and variable for even more accurate calculations.

Fixed overhead costs generally remain the same over time, regardless of how much your business grows. Examples include rent, utilities, licenses, phone bills, and loans.

Variable overhead costs change over time to reflect business growth. Examples include gas, software, maintenance, materials, and salaries.

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Calculating markup for your service business

Markup is the amount you increase your cost on a product or service to arrive at the selling price. This helps you determine how much money you will make when selling your goods and services.

Markup is calculated for each good and each service you sell. It can be understood as a dollar amount (fixed) or percentage (variable) amount.

Markup differs from profit margins, which are more holistic value that includes total costs and revenues across your business.

Here’s a quick calculation:

Markup = (Revenue – Cost of Goods Sold)
________________________
(Cost of Goods Sold) x 100

Tip: Some business owners suggest using an average markup of 15% as an estimate. However, markup value accuracy will help you create a more sustainable and profitable business.

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How to calculate cost budget for your service business

Your cost budget is the price that you need to keep costs at based on your profit and desired margin. It’s the total projected costs to complete your project or job.

Think of it kind of like the cost and expenses of operating your business, or completing a job.

It’s it as a type of financial plan you stick to so that you stay on track and don’t overspend on a project, which could put you in the red.

If you’re completing a landscaping project cost budget calculation, then you should include all expenses required to complete the job:

  • Materials and supplies
  • Equipment
  • Licences, leases, and permits
  • Employee salaries
  • Travel and mileage
  • Overhead

Here’s a quick calculation:

Cost Budget = Invoiced Project Price
_____________________
Markup Dollar Amount

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How to calculate profit margin for your service business

Your profit margin is how profitable your job (or business) is based on costs and price. Bear in mind that your profit margin is not the same thing as your revenue.

Need more on revenue vs profit margin?

Get more on the difference between revenue and profit in this deep dive

Learn more

Here’s a quick calculation:

Profit margin = Revenue – Cost of Goods Sold
______________________
(Revenue) x 100

If you’re having trouble figuring out this calculation on your own, use our profit margin calculator tool above to see your business’ dollar and percentage amount.

Interested in more tools for growing your business?

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