What Profit Margin Should a Painting Business Target?
Charging cost × 1.30 is a 30% markup, not a 30% margin. The painter is actually running 23.1% — and leaving 10% of cost on the table, every quote, in any currency.
Healthy painting businesses target 35–50% gross margin on labour, 20–30% on materials, 15% on access equipment hire, and 25% on overhead allocations. The blended gross margin on a typical residential repaint runs 38–45%.
Markup vs margin — the most expensive arithmetic mistake in painting
Charging "cost plus 30%" produces a 23.1% margin, not 30%. The cost-plus formula is sell = cost ÷ (1 − margin/100). The wrong formula leaves roughly 129 on every 1,000 of cost — in whatever currency the painter quotes in (AUD, USD, GBP, NZD, CAD).
Worked examples below use the $ symbol as a generic monetary unit. The ratios and percentages are identical in any currency.
| Target margin | Correct multiplier | Wrong (markup) multiplier | Revenue lost per 1,000 cost |
|---|---|---|---|
| 20% | ÷ 0.80 (× 1.250) | × 1.20 | 50.00 |
| 25% | ÷ 0.75 (× 1.333) | × 1.25 | 83.33 |
| 30% | ÷ 0.70 (× 1.429) | × 1.30 | 128.57 |
| 35% | ÷ 0.65 (× 1.538) | × 1.35 | 188.46 |
| 40% | ÷ 0.60 (× 1.667) | × 1.40 | 266.67 |
| 50% | ÷ 0.50 (× 2.000) | × 1.50 | 500.00 |
Margin targets by cost category
Different cost lines deserve different margins. Each carries different volume, risk, and overhead absorption.
- Labour: 35–50%. Highest because of the on-cost stack — super, workers' comp, leave, training. Margin recovers the productivity gap.
- Materials: 20–30%. Lower because clients can shop the same paint. Volume buying drops cost-per-litre; rounding to buy sizes captures the rest.
- Access equipment: 15%. Painter's value is logistics. Margin recovers booking and risk.
- Overheads (per-job): 25%. Recovers supervision and admin tied to the job.
Gross vs net margin
Gross is per-job. Net is annual after fixed overheads — rent, vehicles, insurance, software, marketing, principal's wages. A painting business running 40% gross typically nets 8–15%. Below 30% gross, net is usually negative.
The cost-plus model in practice
Surfacely runs the cost-plus formula on every line of every quote. The painter sets margin per category in business pricing settings; the system derives sell from cost and target margin every time. Sell prices are never stored — only cost and margin — so if the painter's wages go up next year, the sell rate auto-adjusts on every new quote to maintain margin.
Why gross margin alone will fool you
A painter can hit 40% gross on every job and still finish the year with nothing. The number that eats it is utilisation — the share of paid hours that actually land on a billable job.
A painter on your books for 38 hours does not paint 38 hours. Travel between sites, depot runs, set-up and pack-down, weather, a sick day, the Monday where the client cancelled. Sixty to seventy per cent billable is a realistic figure for a small crew, and if you priced your labour assuming 100%, your 40% gross margin is fiction before you start.
This is why the loaded cost rate matters more than the wage. If a painter costs you $35/hr fully loaded but only 65% of their paid hours are billable, the rate you must recover on the hours you do bill is closer to $54. Quote at $35 plus margin and you are quietly running at a loss on every job that goes to plan.
What to do when you are below target
Below-target margin is usually one of four things, and they have different fixes. Guessing which one it is costs more than checking.
- You are under-scoping prep. The most common by a distance. Compare quoted prep hours to actual on your last five exteriors. If the gap is more than half an hour a job, you have found it.
- You are not charging access. Scaffold and EWP hire that never made it onto the quote. Check your last three two-storey jobs against the hire invoices.
- Your rate card is stale. Wages, insurance and paint all moved. If you have not reviewed your loaded cost rate in twelve months, it is wrong, and it is wrong in the direction that hurts.
- You are discounting to win. Look at what you quoted versus what you accepted. A 10% discount on a 15% margin job removes about two thirds of the profit — a fact worth knowing before the next negotiation, not after.
The only way to know is to measure the job you finished
Margin at quote time is a forecast. Margin at completion is a fact, and the two are rarely the same number.
Log hours and material purchases against the job as it runs, then compare. The first time most painters do this they find a job they were sure went well came in ten points under. That gap is not a failure — it is the most useful number in the business, because it tells you exactly which assumption in your rate card is wrong.
Do it on five jobs and you stop guessing at your pricing. Do it on twenty and you can quote a new job type with confidence, because you know what your crew actually does rather than what you hope they do.