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 100 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 | 41.67 |
| 25% | ÷ 0.75 (× 1.333) | × 1.25 | 66.67 |
| 30% | ÷ 0.70 (× 1.429) | × 1.30 | 100.00 |
| 35% | ÷ 0.65 (× 1.538) | × 1.35 | 134.62 |
| 40% | ÷ 0.60 (× 1.667) | × 1.40 | 166.67 |
| 50% | ÷ 0.50 (× 2.000) | × 1.50 | 250.00 |
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.