Remodeling Profit Margin Calculator

Why remodeling margins slip

Remodels hide cost in places new construction does not: surprises behind walls, change orders done on a handshake, allowances that get exceeded, and a lot of owner communication time nobody bills. By the final invoice, the margin you estimated and the margin you earned are often far apart.

Worked example: a kitchen remodel

A $48,000 kitchen remodel. Materials and cabinets came to $17,500, your crew’s fully loaded labor to $12,400, subs (electrical, plumbing, countertops) to $7,200, permits, dumpster and rentals to $1,300, and the job’s share of overhead to $3,600.

• Total cost: $17,500 + $12,400 + $7,200 + $1,300 + $3,600 = $42,000
• Profit: $48,000 - $42,000 = $6,000
• Margin: $6,000 ÷ $48,000 = 12.5%

If you wanted a 20% margin on that $42,000 of cost, the price needed to be $52,500 ($42,000 ÷ 0.80). That gap, $4,500, is the cost of under-quoting or of unbilled extras.

Costs remodelers forget

• Change orders performed but never invoiced.
• Return trips for punch-list items and warranty callbacks.
• Allowance overruns the client agreed to verbally.
• Project management and site-visit time, yours included.
• Disposal, protection (floor covering, dust barriers) and cleanup.

Use the result on the next quote

Compare each finished job to the margin you quoted. If kitchens keep landing under target, raise the markup on kitchens, tighten allowances, or write change-order pricing into the contract. One finished job tells you little; five tell you where the leak is.