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Protect your profits using Markup in Joist
Protect your profits using Markup in Joist
Updated over a week ago

This article will take about ten minutes to read and could save you tens of thousands of dollars.

You already know how important it is to price your jobs to ensure you make a profit. When your profits suffer, so does your business, putting your entire operation at risk.

The trouble is that profits can easily get eaten away by unforeseen costs. Worse still are the foreseeable costs that went unaccounted for on the final bill to your client.

But it doesn’t have to be this way.

We’re going to show you the four easy steps to follow when costing your job in Joist to make sure your profits, and your business, stay protected.

Step 1 - Outline your Project Costs

Project Costs are the direct costs of doing a specific job and often include things like materials, labor, equipment rental, and so on.

Basically, anything you’d include as a line item on an estimate or invoice, as you can see in the image below.


Some trade contractors manually adjust the prices of their line items to try to account for their overhead and profit. This is not only time-consuming but also highly prone to error, putting your profits at risk.

A better way to protect your profits, and save time and effort, is to set your item prices in Joist at cost, then cover overhead and profit using the next steps outlined below.

Step 2 - Determine your Overhead Costs

Overhead Costs are the costs of running your business such as office rental, truck payments, insurance, gas, tools and equipment purchases, maintenance costs, and the list goes on and on.

These expenses all have to get paid, so having a clear picture of what these costs add up to, and then pricing them into your jobs, is critical to ensuring your profits are protected.

To do this, many successful contractors will add up all their monthly Overhead Costs and then divide them by the total Project Costs (priced at cost) of the jobs they do on average in a month.

A simple example: Overhead Costs in a month add up to $1500 and the total Project Costs of the jobs you’ll do that month is $50,000.

Divide Overhead Costs by Project Costs in this example and you get 3%.

So in this example, you now know that for each job you do, you need to include an additional 3% to cover your overhead.

Most clients won’t understand seeing a line item for “Overhead Costs” on their bill, so just hang onto this concept for now as we move on to the final two steps where it will all become clear.

Step 3 - Determine your Profit Margin

Profit is the money you need to invest in your business and yourself so you can sustain and even grow over time.

This can include costs like hiring more help, upgrading your equipment, investing in advertising, or personal expenses that make all your hard work worthwhile like retirement savings, tuition for your kids, or maybe even a home renovation of your own.

Most successful contractors aim for a Profit Margin of 17% - 25%, so there’s some flexibility within that range when you’re trying to hone in on the final price for a given client.

The key is to make sure you price your Profit Margin into your estimate or invoice so it stays protected. And here’s the final step where we show you how.

Step 4 - Use Joist’s Markup feature to put it all together

Markup is the industry standard practice of ensuring your Overhead Costs and Profit Margins are factored into the prices you charge, and Joist has a built-in tool that lets you do this seamlessly and easily.

Let’s go back to those line items in our example estimate from Step 1.


Currently, they are priced at cost, but now that we know our overhead for this job is 3% and we’ve landed on a profit margin of 20%, we can use the Markup feature to automatically update our line items to seamlessly include these costs.


Now check out what’s happened to our line items when we save. The prices are all automatically updated for this estimate or invoice, based on the Markup we entered.


Better still, there’s no mention of markup anywhere, which would only confuse most clients. All they need to know is that this is what you charge for the job.

So now, not only are your Project Costs covered but your Overhead Costs are paid for and your Profits stay protected.

If you’ve made it this far in the article, you’re already one step ahead of the competition, and one giant leap farther along on the path to a lifelong and prosperous trade contracting business.

To recap how you can protect your profits with Joist:

  1. Determine your Project Costs by pricing your items in Joist at cost

  2. Add up your monthly Overhead Costs and divide by your monthly Project Costs to get your Overhead Costs percentage (in our example above this came to 3%)

  3. Decide on a healthy Profit Margin, typically between 17-23%, which gives you flexibility on the final price of your invoice

  4. Use the Markup feature in Joist to add your combined Overhead Costs and Profit Margin percentage to the final price of your estimate or invoice (in our example above this was 3% overhead + 20% profit for a markup of 23%)

Markup seamlessly updates the prices on your estimate or invoice, with no mention of the word markup anywhere to avoid client confusion.

Just remember, without healthy profits your business can be put at serious risk. Follow the above steps and you will not only protect your profits, but ensure your trade contracting business thrives.

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