Aerospace & Defense Manufacturing calculator
Defense Contract Margin Calculator
Check the margin on a defense contract estimate. Enter revenue and costs for the same scope, plus your target margin on revenue.
What this calculator does
- Calculate a firm fixed price contract’s estimated margin using its revenue and complete program cost.
Formula used
- Program profit = contract revenue − estimated program cost
- Contract margin = program profit ÷ contract revenue × 100
- Cost at target margin = contract revenue × (1 − target margin ÷ 100)
- Cost headroom = cost at target margin − estimated program cost
Inputs explained
- Contract Revenue: Firm fixed price revenue for the costed contract scope.
- Estimated Program Cost: All allocable direct and indirect costs for that scope.
- Target Margin: Your bid or program margin target on revenue.
How to use the result
- Best suited to fixed price bid Review, program cost forecast.
- This does not calculate incentive fees, progress payments or allowable reimbursement. Taxes, financing and contingencies enter only through your complete cost estimate. A positive revenue below $0.000000001 is outside the supported range for a margin percentage.
Current U.S. benchmarks
- Steel mill PPI stands at 381.162 (BLS, Aug 2026), up 23.4% from a year earlier. New factory orders are up 8.5% year over year (Census).
- The U.S. has 11,691 transportation equipment establishments employing about 1,682,910 workers (Census County Business Patterns, 2023).
Common questions
- Is margin the same as markup? No. Margin divides profit by revenue; markup divides profit by cost.
- Can this evaluate a cost reimbursement contract? Use the applicable fee and reimbursement model for that contract. This calculator estimates profit on a fixed revenue scope.
- Which overhead belongs in program cost? Include costs allocated to this scope by your consistent accounting method, without counting direct charges twice.
- Why is the margin blank at zero revenue? Profit can be calculated at zero revenue, but a percentage of zero revenue is undefined.
Last reviewed 2026-10-06.