Cost-Plus Job Pricing Calculator

How it works

Cost-plus pricing starts from what the job will cost you and adds a profit on top. The direct costs are the ones you can trace to this job: the materials you buy for it and the labor hours spent on it, at what those hours cost you.

Overhead covers the costs no single job causes but every job has to pay for: rent, insurance, vehicles, tools, office time. It is allocated as a percent, either of the job's direct cost or of its direct labor, depending on how your rate was worked out.

The profit markup is then added as a percent of the total cost. Because the profit is a percent of cost rather than of price, it is a smaller share of the quote: a 20% markup is a 16.67% share of the price.

Formula

labor       = labor hours × labor cost per hour
direct cost = materials + labor
overhead    = overhead rate × (direct cost  or  labor)
total cost  = direct cost + overhead
profit      = profit markup × total cost
quote       = total cost + profit = total cost × (1 + profit markup)

Example

A job using $1,200 of materials and 24 hours of labor at $45 an hour has $1,080 of labor and $2,280 of direct cost. Overhead at 15% of direct cost adds $342.00, for a total job cost of $2,622.00.

A 20% profit markup adds $524.40, for a quote of $3,146.40; the profit is 16.67% of the quote. Applying the 15% overhead to labor only would add $162.00 instead, for a total cost of $2,442.00 and a quote of $2,930.40.

Assumptions and limitations

• Labor is entered at what it costs you per hour (wages plus payroll taxes and benefits), not at a billing rate. If you enter a billing rate, the profit is counted twice.
• The overhead rate and profit markup defaults are illustrative. A realistic overhead rate comes from your own books: annual indirect costs divided by the annual total of the base (direct cost or labor) it is applied to.
• The quote is before sales tax, permits, subcontractor markups or contingency, unless you include them in materials.
• This calculator prices a job before it starts. It does not track what the job actually cost once it is done.
• Results are for informational and educational purposes and are not financial, tax or accounting advice.

Frequently asked questions