Step 1: Add up monthly fixed overhead
Fixed overhead is what you pay even in a month with no jobs: truck payments, insurance, phone, software, office or yard rent, your own base pay if you take a salary. Use last year's totals divided by 12. Example: $4,000 per month. If you have not worked this out yet, see how to calculate contractor overhead.
Step 2: Find the contribution per job
Contribution is what a typical job leaves after its own direct costs (materials, true labor cost, permits, dump fees, subcontractors):
| Average job price | $900 |
| Direct cost per job | $500 |
| Contribution per job | $400 |
|---|
Step 3: Divide
| Break-even jobs: $4,000 ÷ $400 | 10 jobs per month |
| Contribution margin: $400 ÷ $900 | 44.4% |
| Break-even revenue: 10 × $900 | $9,000 per month |
What the number tells you
| Only 7 jobs this month: 7 × $400 − $4,000 | −$1,200 (loss) |
| Jobs needed for $2,000 profit: ($4,000 + $2,000) ÷ $400 | 15 jobs |
| Raise the average price to $1,000: $4,000 ÷ $500 | 8 jobs |
A $100 higher average price cuts break-even from 10 jobs to 8, the same effect as winning two extra jobs every month. That is why pricing from a target margin rather than a markup matters.
Run your own numbers with the break-even calculator, then check each quote with the job price calculator. The full method is in how to price a contractor job.
Want it built into your quotes?
The Contractor Quote & Margin Sheet takes hours, labor cost, materials and overhead and prices each job from your target margin in Google Sheets or Excel.
Figures are illustrative estimates for planning only. This is not accounting, tax or legal advice.