The quote says one number. What the job actually leaves in your account is usually a different, smaller one. The gap between the two is where most building and trade businesses lose money, and it rarely shows up as a dramatic loss. It shows up as a job that looked fine on paper and somehow left almost nothing behind once it was finished.
This job profit margin calculator closes that gap. Enter the price you have quoted the client ex-VAT, your materials and labour, the hours the job will take, and a contingency on cost. It returns the net profit, the real net margin, the markup on cost, the total cost with contingency, and the profit per hour, all updating as you type.
Why trades lose money on jobs that looked profitable
Almost no one quotes a job intending to lose money on it. The losses creep in through small, repeated mistakes that each feel harmless:
- Pricing by markup while thinking it is margin. A 25% markup is only a 20% margin. If you add a percentage on cost and treat it as your profit share of the sale, you undercharge on every job without ever deciding to.
- Skipping contingency. Jobs do not run to plan. The wall is not square, the delivery is late, the old pipework is worse than it looked. If you did not price a buffer in, that cost lands directly on your profit.
- Ignoring hours. A job can carry a fat headline price and still pay badly once you divide the profit by the hours it ate. The big, impressive jobs are often the worst offenders.
- Confusing revenue with profit. A £100,000 year of jobs at a 6% margin pays less than a £60,000 year at 20%. Turnover is vanity; margin and profit per hour are the numbers that feed you.
The tool above turns each of these from a vague worry into a number you can see and adjust before you commit to a price.
Margin and markup are not the same number
This is the mistake that costs the most, so it is worth being precise.
- Markup is the uplift you add on top of your cost. Cost £8,000, markup 25%, price £10,000.
- Margin is profit as a share of the price you charge. That same £2,000 profit on a £10,000 price is a 20% margin, not 25%.
| Markup on cost | Real net margin |
|---|---|
| 15% | 13.0% |
| 20% | 16.7% |
| 25% | 20.0% |
| 30% | 23.1% |
| 50% | 33.3% |
Read it the other way and it is just as important: if you want a 30% net margin, a 30% markup will not get you there. You would need a markup of about 43%. Set prices by markup believing it is your margin and you are quietly leaving profit on the table on every single job.
Contingency eats profit, so price it on purpose
Contingency is not pessimism, it is arithmetic. In this calculator it is a percentage applied to your combined materials and labour, added to total cost. Because it lifts your cost without lifting the price, every point of contingency comes straight out of profit.
That is exactly why it belongs in the quote. If you know from experience that one job in four runs over, a contingency built into the price means the good jobs subsidise the messy ones and you still clear your margin across the book. Quote with no contingency and the first snag turns a profitable job into a break-even one.
Profit per hour: the number that decides which jobs to take
Two jobs at £12,000 are not the same job if one takes 120 hours and the other takes 200. The first pays half as much again per hour. Profit per hour is the figure that lets you compare a job against the next one in the diary, and against simply not taking it on.
If a job's profit per hour comes out below what your routine work pays, that is a signal: either the price is too low, the hours estimate is too optimistic, or the job is not worth taking while better-paying work is available.
How to use the result
Start from your real, full cost: honest materials, honest labour, and a contingency that matches how your jobs actually run. Price ex-VAT so the margin reflects trading profit, not tax you are holding for HMRC. Then read the four numbers together: net profit tells you the prize, margin and markup tell you whether your pricing logic is sound, and profit per hour tells you whether the job is worth the diary slot.
The operations page explains how to systematise costing and pricing so this is not a one-off calculation but a repeatable process. To present the price so it actually closes, read quotes that win more jobs and the science of pricing for tradespeople.
Once you have your number, line it up with a sensible labour rate using the day rate calculator, turn it into a client-ready document with the professional quote and estimate generator, or browse the rest of our tools. To review your pricing structure with your real figures on the table, talk to us.