Work out your profit margin, markup percentage and cost breakdown for any trade job. See how your margins compare to industry benchmarks.
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Try QuoteSmith Free for 7 DaysProfit margin is one of the most important numbers in your trade business. It tells you how much of every pound you charge actually ends up as profit after all costs. Many tradespeople focus on turnover or day rates, but without understanding your margins, you could be working hard and earning less than you think.
One of the most common pricing mistakes tradespeople make is confusing margin with markup. If your costs are £700 and you add 30% markup, you charge £910 -- but your profit margin is only 23%, not 30%. Understanding this difference is crucial for pricing your work accurately. A 30% profit margin means you need to apply a 42.9% markup to your costs.
Several factors can erode your profit margins without you realising:
To set profitable prices, start by calculating all your costs (both direct job costs and a proportion of your overheads). Then add your target profit margin. For most tradespeople, a net margin of 20-30% is the sweet spot -- enough to build a sustainable business, invest in tools and training, and weather quiet periods. Use tools like QuoteSmith to create detailed proposals that account for all costs and ensure consistent margins across every job.
Common questions about profit margins for tradespeople.
A good net profit margin for most tradespeople is between 15% and 30%. Specialist trades like electricians and plumbers often achieve 25-35% margins due to required qualifications and certifications. General builders typically work on 15-25% margins, while painters and decorators can achieve 30-45% due to lower material costs.
Profit margin is the percentage of revenue that is profit. Markup is the percentage added to your costs. For example, if you charge £1,000 and costs are £700, your margin is 30% (£300/£1,000) but your markup is 42.9% (£300/£700). Many tradespeople confuse the two, leading to lower profits than expected.
Subtract all costs (materials, labour, other expenses) from the total you charge. Divide the result by the total charge and multiply by 100. For example: charge £2,000, total costs £1,500. Profit = £500. Margin = (£500 / £2,000) x 100 = 25%.
Yes. Include the cost of your own time as a labour expense. If you don't, you'll overestimate your profit margin and potentially underprice jobs. Set yourself a day rate (what you'd pay someone else) and include it as a cost. Your profit should be what's left after all costs including your time.
Include all direct costs: materials, labour (including your own time), skip hire, equipment hire, subcontractors, and travel. Also factor in overhead costs: van running costs, insurance, tools, phone, accountant fees, and other business expenses. Only by including all costs can you see your real margin.
Buy materials at trade prices or in bulk, negotiate better supplier rates, reduce waste, improve efficiency, track all expenses, increase prices gradually, specialise in higher-value work, and reduce overheads. Also ensure you are quoting accurately -- underquoting is the biggest margin killer.
Many tradespeople add 10-20% markup on materials to cover sourcing and management time. Some charge materials at cost and build the margin into their labour rate instead. Either approach works, but ensure your overall job margin hits your target of 15-30%.
Yes. Smaller, quicker jobs often have higher margins. Larger, complex jobs may have lower percentage margins but higher absolute profit. Repeat work and maintenance contracts tend to have higher margins. Aim for a consistent average across all work rather than the same margin on every job.
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