Restoration
Restoration Margin Calculator
Works margin on restoration work, where getting paid late is a cost in itself.
Result
Markup is measured against your cost, margin against the price you charge. A 50% markup is a 33.3% margin, not a 50% one. Pricing off the wrong one is the most common way a job that looked profitable turns out not to have been. Gross profit is what is left after the cost of doing the job. Overhead comes out of that: the building, the office wages, the vans, insurance, software and advertising. A healthy gross margin still loses money if overhead is larger.
Get a Free Business AuditHow the calculation works
Margin is the gross profit as a share of the price, so it is calculated against revenue rather than cost, and the equivalent markup is always higher. Both are shown. On restoration work the margin has to cover something most trades do not carry: the gap between doing the work and being paid for it, because insured jobs are settled after the scope is reviewed, which can be weeks or months on a large loss.
What moves the number
- The margin and markup relationship, which is where errors concentrate.
- How long payment takes, since the work is funded in the meantime.
- Equipment utilisation, as drying equipment is capital sitting on jobs.
- Rework and supplement risk on jobs where scope was disputed.
Where this one goes wrong
The cost of carrying the work is the hidden pressure on margin in this trade. Labour, equipment and materials are paid out as the job runs, and the insurer settles afterwards, so a business with thin margins and slow settlements runs out of cash while being profitable on paper. That is the most common way restoration companies fail. Margin has to fund that working capital, not just overhead and profit. Equipment is the related issue: dehumidifiers and air movers on a job are capital that is not available for the next one, so utilisation affects margin as directly as pricing does.
Before you quote
- Check the equivalent markup so the two figures are not confused.
- Account for the time between doing the work and being paid.
- Track equipment utilisation, since idle units are unfunded capital.
Questions
About this calculator
Why do profitable restoration companies run out of cash?
Because the work is paid for after it is done. Labour, equipment and materials go out as the job runs while the insurer settles weeks or months later, especially on a large loss. A business with thin margins and slow settlements can be profitable on paper and still unable to make payroll.
How does equipment affect margin?
Drying equipment on a job is capital that cannot earn on the next one, so utilisation matters as much as the day rate charged. A company with equipment sitting idle between losses is carrying the cost of it regardless, which has to be recovered across the jobs that do run.
What margin does restoration work need?
Enough to cover overhead, profit and the working capital tied up between doing the work and being paid, which is a real component this trade carries and many others do not. Benchmarking against trades paid on completion understates what is needed here.
The formula
margin = (price - cost) / price; markup = (price - cost) / cost
Put this calculator on your site
Free to embed. Paste this where you want it to appear. It stays up to date automatically because it loads from BDEVY.
Please keep the attribution line. It is the only thing we ask in return.
How to use this calculator
- Price charged ($). Enter your own figure; the page starts at $5,600.
- Direct cost ($). Enter your own figure; the page starts at $3,200.
The result updates as you type, so you can try a figure, see what it does to gross margin, and change it back. Nothing you enter is sent anywhere or saved.
A worked example
These are the figures the calculator opens with. Every number in the results column below is produced by the same calculation the page runs, so you can follow it through before putting your own figures in.
What goes in
| Input | Value |
|---|---|
| Price charged | $5,600 |
| Direct cost | $3,200 |
What comes out
| Result | Value |
|---|---|
| Gross margin main result | 42.9% |
| Gross profit | $2,400 |
| Same thing as a markup | 75.0% |
That job earns $2,400 of gross profit, a 42.9% margin. The same job described as a markup is 75.0%.
How sensitive the answer is
Holding everything else steady and changing only price charged, this is what happens to gross margin. It is worth knowing which of your inputs the answer actually hinges on, and which barely move it.
| Price charged ($) | Gross margin |
|---|---|
| $2,800 | -14.3% |
| $4,200 | 23.8% |
| $5,600 example above | 42.9% |
| $8,400 | 61.9% |
| $11,200 | 71.4% |
Every other input is held at the example value while this one changes, which is not how a real job behaves. Treat it as a guide to which number matters most, not as five separate quotes.
What each figure means
- Price charged ($)
- A money amount, starting at $5,600.
- Direct cost ($)
- A money amount, starting at $3,200.
What the results tell you
| Result | What it is |
|---|---|
| Gross margin | The headline result. A percentage. |
| Gross profit | A money figure. |
| Same thing as a markup | A percentage. |
Estimating is the easy part
The jobs you never hear about cost more than the ones you mis-measure. BDEVY builds the marketing, systems and automation that bring them in.