The maths, explained
Start with the selling price and separate direct labour, materials, subcontractors and the overhead assigned to this job. The calculator subtracts these costs to show estimated profit. Margin compares that profit with revenue; markup compares it with cost. A target margin also gives a required selling price, which is a planning comparison rather than a recommendation to change a signed contract.
Profit = selling price − total cost; margin = profit ÷ selling price; target price = cost ÷ (1 − target margin)
A worked example
The worked example below uses the calculator’s initial inputs and the same calculation function as the live interface. Replace example amounts with your own records; changing currency does not convert the numbers. Physical reference dimensions are stored in metric units, and the interface can display their imperial equivalents. Rounded display values may differ slightly from the full precision retained in the calculation.
| Your inputs | Editable example — not a market quote |
|---|---|
| Project selling price (GBP) | 25,000 |
| Labour cost (GBP) | 7,000 |
| Materials cost (GBP) | 8,000 |
| Subcontractors (GBP) | 2,000 |
| Allocated overhead (GBP) | 2,500 |
| Target profit margin (%) | 20 |
| Estimated job profit | £5,500.00 |
| Profit margin | 22% |
| Markup on cost | 28.21% |
| Price for target margin | £24,375.00 |
Assumptions used
All cost inputs must cover the same period and use one currency. Employer charges and overhead remain business-specific inputs. Defaults are educational scenarios, not market averages. This model does not determine tax obligations or contractual rights. Ratios with a zero denominator are marked as undefined rather than presented as a misleading zero percent.
On your side of the Atlantic
Use metres, square metres and supplier quotations in pounds. UK VAT depends on the work and eligibility: 20% is a common standard-rate reference, not an assumption applied by this tool.
Common mistakes
Do not confuse a markup percentage with the same margin percentage. Confirm whether quoted revenue includes tax and whether overhead has already been included in another input. Missing job costs make profit look better than it is.
Before ordering or tendering, compare at least two scenarios: your base takeoff and a realistic alternative. Keep assumptions with the result so differences are explainable. Save an estimate only on a suitable device. A shared link contains the entered values, so avoid including confidential information. An exported estimate is a snapshot and does not update when a supplier changes a price.
Questions from the jobsite
What does this calculator measure?
What is the first mistake to avoid?
Are the example prices supplier quotes?
Which tax assumptions apply in United Kingdom?
How should I handle waste and contingency?
Can I use the result in a tender or estimate?
Planning estimate only. Not a substitute for a professional quote or local building-code compliance. Verify quantities, tax treatment and contract requirements.
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