Manufacturing Job Gross Margin
It is the markup on a production job after the materials and shop labor that touch that job — before overhead and scrap surprises.
Formal definition
Job gross margin equals job revenue minus direct material and direct labor, divided by job revenue, expressed as a percentage.
Why it matters
Job shops live and die on quote accuracy; margin below about 35% often cannot fund equipment, supervision, and rework.
Where you see it
- Job costing reports in ERP/MRP systems
- Estimator and quoting meetings
- Make-to-order contract reviews
- Operations management textbooks
- Private-equity diligence on custom manufacturers
Worked example
- Job revenue: $50,000.
- Material:
- Gross margin = (($50,000 − $30,000) ÷ $50,000) × 100 = 40%.
- Interpretation: 40% of job revenue covers shop overhead and profit.
How Business metrics calculates it
(Job revenue − Direct job costs) ÷ Job revenue × 100.
The range we use for status labels
On Business metrics, the status band for this KPI is roughly 35 to 55. Higher values are generally healthier in this band. Your niche can sit outside it honestly — the label is a prompt to read the coaching, not a certificate.
Where people fool themselves
Job margin on the prototype will not match the 500th unit. Do not use the prototype to hire the second shift.
Run it on your own numbers: the Manufacturing calculator.