Partnerships & OpportunitiesCOMPASS PRO / CALCULATION SHEET 02
Price the job.
Know the margin.
Markup and margin are two different numbers. Model your own direct costs, allocated overhead, contingency and offered price before calling a bid profitable.
Open the calculation sheet01 / ENTER YOUR ASSUMPTIONS
Break down
the proposed bid.
Bid scenarios require JavaScript. You can work through the margin, markup and stress formulas manually while this worksheet is unavailable. No figures are submitted.
THE REALITY CHECK / METHOD
A profitable-looking
number can mislead.
Contractors often discuss a percentage markup on cost, then mistake it for the percentage of the selling price they retain. They are not interchangeable. This worksheet keeps cost, price, markup, margin and a cost-overrun stress scenario separate.
Every number is supplied by you. The output is an illustrative project-level business scenario, not a construction price quote, accounting statement, bidding instruction or tax calculation.
03 / THE MATHEMATICS
No black-box
percentage.
Cost before contingency: labor + materials + subcontractors + other direct costs + allocated project overhead.
Conservative modeled cost: base cost × (1 + contingency % ÷ 100). The reserve is modeled as if spent, not as a guaranteed expense.
Margin: (contract price − modeled cost) ÷ contract price × 100. Markup: (contract price − modeled cost) ÷ modeled cost × 100. The markup is undefined when modeled cost is zero.
Price for target margin: modeled cost ÷ (1 − desired margin % ÷ 100). Price for target markup: modeled cost × (1 + desired markup % ÷ 100).
At zero modeled cost, markup and a price matching the selected margin or markup target are not defined. A positive price would have a 100% modeled margin in this incomplete cost scenario.
Stress case: modeled cost + (base cost × extra overrun % ÷ 100). The overrun is additional to the assumed contingency spend. These are simple scenario formulas, not forecasts.
FURTHER READING / BUSINESS & ACCOUNTING
U.S. Small Business Administration — cost and break-even planning ↗IRS Publication 334 — business receipts and gross-profit concepts ↗Business accounting methods can define gross profit differently from this inclusive project-cost model. Consult your accounting professional for official financial statements.
COMPASS PRO / THE NEXT FIELD NOTE
Estimate clearly.
Build confidently.
Return to the contractor workshop →A modeled price still needs written work boundaries. Prepare a scope and exclusions draft alongside this scenario.
Reviewed · Professional field instrument 02.