The formula, and why it's not that simple
Revenue − Costs = Profit. The catch is what you count as a cost. Miss the second trip to the merchant, the skip, the extra half-day and the disposal fee, and the job looks better on paper than it was in real life.
- Labour — your own hours at your day rate, plus anyone you paid.
- Materials — what you actually paid, including the bits you had to go back for.
- Subcontractors — sparks, plasterers, plant operators.
- Fuel and travel — every trip to site and to the merchant.
- Equipment — hire, consumables, blades and discs.
- Disposal — skips, tip runs, waste transfer.
- Other direct costs — parking, permits, congestion charges, parts under warranty.
Revenue, cost, profit and margin
These four words get used interchangeably and they shouldn't be. Revenue is what the customer paid you. Cost is what the job took to deliver. Profit is the difference in pounds. Margin is that profit expressed as a percentage of revenue — the number that lets you compare a £900 job with a £9,000 one.
| Term | Example | How it's worked out |
|---|---|---|
| Revenue | £2,400 | What you invoiced, excluding VAT |
| Costs | £1,700 | Labour, materials, travel, hire, disposal |
| Profit | £700 | Revenue − costs |
| Profit margin | 29.2% | Profit ÷ revenue × 100 |
A worked example
A bathroom refit invoiced at £2,400 excluding VAT. Four days of your own labour at a £300 day rate is £1,200. Materials came to £380. You paid a tiler £250 for a day. Fuel and merchant trips came to £40, and a mini skip was £180. Total costs: £2,050, so profit is £350 and the margin is 14.6%.
If you had quoted the same job assuming three days rather than four, that extra day would have taken the margin down to about 2% — which is why comparing quoted hours with actual hours matters more than any other check.
Turn the numbers back into better pricing
Do this for five or six recent jobs and the pattern is usually obvious: one job type consistently runs over, or materials markup isn't covering the running around. Fix the quote template, not the individual job.
Note that profit on a job is not the same as business profit. Overheads such as insurance, phone and accountancy sit above job level — they're recovered through your day rate, so make sure that rate is right.
Put it into practice
Do this in minutes with the Job Pricing & Profit Calculator
Price the job, save it against the customer, then record what it really cost — so quoted profit and actual profit sit side by side.
Sources & further reading
Common questions
- What is a good profit margin for a trade job?
- There's no single right number. Many trades aim for 10–20% on top of full costs for domestic work, with more on specialist, high-risk or awkward jobs. What matters is that the margin is consistent and covers quiet periods.
- Should my own labour count as a job cost?
- Yes, at your day rate. If you leave your own time out, every job looks profitable and you'll never spot the ones that pay you less than working for someone else.
- Does VAT count as revenue?
- No. If you're VAT registered, VAT you charge is collected for HMRC, so work out job profit on the figures excluding VAT.
- What's the difference between profit and margin?
- Profit is pounds; margin is that profit as a percentage of what you charged. A £700 profit on a £2,400 job is a 29% margin; the same £700 on a £9,000 job is under 8%.
Best value
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Profit Margin Calculator
Check what a finished job actually made you, in pounds and as a margin.
Job Pricing Calculator
Add labour, materials, travel and margin to get the price you should quote.
Material Markup Calculator
Turn trade prices into customer prices — and work backwards from what you charged.
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