Step 12 β Apply Contractor Overhead & Profit to Reach Final Price
This is the step most DIY calculators get wrong. Gross margin is not a markup added on top of cost β it's the percentage of the final selling price that represents overhead and profit. That means you divide by the margin, you don't multiply by it.
Formula
Psell = Cdirect / (1 - G)
Example: $10,000 in direct costs at a 38% target gross margin = $10,000 / 0.62 = $16,129, not $10,000 × 1.38 = $13,800.
Wicomico County contractor tiers run:
β’ Tier 1 (small local crews): 25-32% gross margin
β’ Tier 2 (established regional firms): 35-45% gross margin
β’ Tier 3 (commercial/industrial): 20-30% gross margin on high-volume work