Builders margin calculator

The maths

Builders margin is added on top of the contractor price, so the formula is simply:

price to client = contractor price × (1 + margin)

At 15% on a $20,000 contractor price that is $20,000 × 1.15, which is $23,000. The margin itself is $3,000.

Unlike a materials markup, builders margin goes across the whole job: labour, materials and subcontractors. It covers running the job, carrying the risk and the overheads that sit behind it.

A worked example

A bathroom renovation comes to $18,400 in labour, materials and subbies. You apply a 20% builders margin.

• Margin: $18,400 × 0.20 = $3,680
• Price to the client, ex GST: $22,080
• Add GST at 10%: $24,288 is what they pay

Work the margin on the ex GST figure and add GST at the end. GST is collected for the ATO and passed on, so it is not part of what you are making.

The percentage you add is not the share you keep

This one catches people out, and it is worth understanding even though both numbers are correct.

Adding 15% to a $20,000 price gives $23,000, and the $3,000 margin is 13.04% of that $23,000 total, not 15%. The percentage is measured against the cost you started from, not the final figure.

That is fine, and it is how builders margin is quoted and how contracts are written. Just know which number you are looking at when you compare your margin to somebody else's, or when you are working out what you need to keep on a job. The calculator shows both.

Things worth understanding

• The cost has to include everything. Labour, materials, subbies, plant, tip fees, and the supervision and admin the job actually takes. Margin on an incomplete cost is margin you will not see.
• Margin is not profit in your pocket. Overheads, vehicle, insurance, tools and the hours spent quoting all come out of it.
• Be consistent across quotes. Whatever percentage you settle on, applying it the same way every job is what makes your pricing defensible.
• GST sits on top. Margin first on ex GST figures, then GST.