Break-Even Job Price Calculator
Reviewed by Gerald G., founder & reviewing editor of CalcAuthority — journeyman cabinet installer, former subcontractor, and former contracting business owner who operated with 18 employees. The framing is from the field; every number comes from the stated formula.
Every job has a price below which you are paying to work. Most contractors know their costs roughly, add a familiar markup, and hope — but the honest floor comes from a division, not a multiplication, and confusing the two is one of the most expensive habits in the trades (see the Markup vs. Margin guide). This calculator takes your direct costs, your overhead share, and your target margin, and returns two numbers: the break-even price where the job covers everything and earns nothing, and the target price that actually delivers your margin. It pairs with the How to Price a Job guide.
How It Works
Direct costs are what this job alone consumes: burdened labor (from the Labor Burden and Crew Cost calculators), materials, subs, rentals, permits. Overhead is everything that exists whether or not you win this job — office, trucks, insurance, advertising, your salary — expressed as a percentage of revenue. If overhead runs $96,000 on $800,000 of revenue, that is 12%: every job must hand over 12% of its price just to keep the company standing.
The reason you divide: overhead and margin are percentages of the price, and the price is what you are solving for. Cost ÷ (1 − overhead% − margin%) makes the percentages come out right at the answer. Multiplying cost by (1 + 22%) to get "12% overhead + 10% profit" undershoots — on $11,000 of cost it produces $13,420 instead of the correct $14,103, silently donating $683.
Worked Examples
Example 1 — mid-size remodel. Direct costs: $6,000 labor + $4,000 materials + $1,000 subs = $11,000. Overhead 12%, target margin 10%. Break-even price = $11,000 ÷ 0.88 = $12,500. Target price = $11,000 ÷ (1 − 0.12 − 0.10) = $11,000 ÷ 0.78 = $14,103. Check it: 12% of $14,103 is $1,692 overhead, 10% is $1,410 profit, and $14,103 − $1,692 − $1,410 = $11,001 ≈ costs. The percentages hold at the answer.
Example 2 — small service job. Direct costs $3,800, overhead 15%, target margin 12%. Break-even = $3,800 ÷ 0.85 = $4,471. Target = $3,800 ÷ 0.73 = $5,205. Anything quoted between $4,471 and $5,205 keeps the lights on but shortchanges the margin; anything under $4,471 is a paid donation to the customer.
What This Result Means
The break-even price is a floor, not a suggestion — at that number, you worked for free and merely kept the company alive. The distance between break-even and target price is your entire profit; every discount comes directly out of it. If the market truly will not pay your target price, the answer is found in the inputs — cheaper cost structure, lower overhead, different work — not in quietly quoting below the floor.
Reading the Result
- Winning bids consistently at or below break-even: you are buying work. Volume makes this worse, not better — see the Underbidding Trap guide.
- Bidding between break-even and target: survival pricing. Acceptable tactically (keeping a crew busy in a slow month), corrosive as a habit.
- At or above target price: the business is being paid for cost, overhead, and profit. This is the only zone that funds growth, slow seasons, and mistakes.
Overhead and margin percentages are yours to supply — the calculator does not assume industry averages. If you do not know your overhead percentage, compute it from last year's books: total overhead ÷ total revenue. The Overhead Recovery Calculator walks through it.
When to Use This Calculator
Use this calculator:
- Before quoting any job — know the floor before you hear yourself say a number.
- When a customer pushes back on price — you can negotiate scope knowing exactly where the job turns unprofitable.
- When a competitor's number seems impossible — sometimes it is; sometimes their overhead is genuinely lower. This shows which.
- After running the numbers on a finished job with the Job Profit Margin Calculator — if margins keep coming in under target, the floor you are quoting from is set wrong.
Limitations
- Only as good as the cost estimate: if labor hours are guessed low, the "break-even" price is fiction. Use burdened rates.
- Treats overhead as a flat percentage of revenue; very large or very small jobs may deserve a different overhead allocation.
- Does not model payment timing, retainage, or financing costs on long jobs.
- Margin here is pre-tax operating margin on the job — not your take-home.
Frequently Asked Questions
Why divide instead of just marking up my costs?
Because overhead and profit are percentages of the selling price, not of the cost. If you want 10% of the final price to be profit, the price must satisfy: price = cost + 12% of price + 10% of price. Solving that gives price = cost ÷ (1 − 0.22). A 22% markup on cost yields only about 18% combined overhead-and-profit on price — the gap is invisible on one job and enormous over a year. The Markup vs. Margin guide works through it step by step.
What overhead percentage should I enter?
Your own, from your books: last year's total overhead (everything not chargeable to a specific job — rent, office staff, trucks, insurance, advertising, your base salary) divided by last year's revenue. Trades commonly land anywhere from 8% to 30% depending on size and structure, which is exactly why borrowing someone else's number is dangerous.
Should my own pay be in direct costs or overhead?
Split it by role. Hours you spend physically working on the job are direct labor — burden them like any employee. Your time estimating, managing, and running the company is overhead. If all of your pay is in neither place, every bid is subsidized by you working for free, and the break-even price the calculator shows will be too low.