Guide
How to price a roof at a target margin
Adding 35% to your cost doesn't give you a 35% margin. Here's the simple math that does, with examples you can check on a calculator.
Published · welvy team
Markup vs. margin
Markup is what you add on top of your cost. Margin is the share of the price you keep. They sound alike but give different prices, and the difference comes straight out of your profit.
Say a roof costs you $12,000 in materials and labor, and you want to keep 35%.
- Markup: $12,000 + 35% = $16,200. You keep $4,200, which is only 25.9% of the price.
- Margin: $12,000 ÷ (1 − 0.35) = $18,461.54. You keep $6,461.54, which is 35% of the price.
The formula
Price = Cost ÷ (1 − target margin)
Write the margin as a decimal: 30% is 0.30, 35% is 0.35, 40% is 0.40.
Quick table for a $10,000 cost
| Target margin | Price | You keep |
|---|---|---|
| 25% | $13,333.33 | $3,333.33 |
| 30% | $14,285.71 | $4,285.71 |
| 35% | $15,384.62 | $5,384.62 |
| 40% | $16,666.67 | $6,666.67 |
Things that trip people up
- Count every cost: materials, labor, dumpster, permits and delivery, not just shingles
- Use your real material prices before tax, and keep your price book current when suppliers change prices
- Discounts come off your margin, so know what you keep after one
- Apply sales tax the way your accountant advises for your state
Letting software do it
In welvy you enter the cost of each line and your target margin, and it sets every price for you. It also shows the margin you'll keep on the whole job before you send the estimate. Your costs never appear on the customer's copy.
Common questions
What's the difference between markup and margin in roofing?
Markup is added to cost; margin is the share of the price you keep. A 35% markup on a $12,000 cost gives $16,200, but that's only a 25.9% margin.
How do I price a roof for a 35% margin?
Divide your total cost by 0.65. A $12,000 cost becomes $18,461.54, and you keep $6,461.54.
What gross margin should a roofing company aim for?
It depends on your market, overhead and the kind of work you do. Work out what your overhead and profit need, then set a target margin that covers both, and check it against your real numbers each year.