Profit Margin Calculator
Revenue is not profit. A job can bring in a large payment and still lose money once labour, materials, travel and overheads are counted. Profit margin shows what percentage of the final selling price remains after every cost has been paid.
Key pricing factors
Complete Job Cost
Include the working wage, materials, subcontractors, travel, disposal and the job share of business overheads.
Selling Price
Use the amount charged before VAT. VAT collected for HMRC is not business revenue or profit.
Gross Profit
Subtract the complete job cost from the selling price. This cash must still support tax, reinvestment and quiet periods.
Profit Margin
Divide profit by the selling price and multiply by 100. This differs from markup, which divides profit by cost.
Example: Profit on a Bathroom Repair
- Customer price before VAT
- £1250.00
- Complete labour and job costs
- £1000.00
- Gross profit
- £250.00
- Profit margin (20%)
- £250.00
A £250 profit on a £1,250 selling price is a 20% margin. The same £250 is a 25% markup on the £1,000 cost.
Practical quoting guidance
- Measure margin after each completed job using actual time and supplier invoices, not only the original estimate.
- Keep VAT outside the margin calculation because it is collected on behalf of HMRC.
- Investigate jobs with weak margins to find missed labour, materials, travel or scope changes.
Frequently asked questions
What is the difference between profit margin and markup?
Margin measures profit as a percentage of the selling price. Markup measures profit as a percentage of cost. A 25% markup produces a 20% margin.
What profit margin should a trade business aim for?
Targets vary by trade, risk and overhead structure. Many businesses model 15% to 30%, but your own accounts should determine the margin needed for sustainability.
Should my own labour be counted as profit?
No. Pay for the time spent doing the work should be included in job cost. Profit is what remains after that working wage and all other costs are covered.