Profit MarginCalculator

Net profit margins of 15–25% are considered healthy for most UK trade businesses in 2026. Margins below 10% leave little buffer for slow periods, bad debts, or unexpected costs. Larger firms with high overheads often run 8–15%; lean sole traders who own their van and tools outright can achieve 25–35%. The key benchmark: your net margin should at minimum cover 2–3 months of operating costs in reserve.

Gross profit is revenue minus direct job costs (materials and direct labour). Net profit deducts overhead costs on top of that — van, insurance, office rent, accountancy, marketing, tools, subscriptions. The calculator shows both, so you can see which costs are eating your margin.

Reduce non-billable time (admin, quoting, chasing invoices), buy materials on better trade accounts, reduce material wastage with accurate ordering, cut vehicle and fuel costs, and avoid underquoting — the most common margin killer. AI quoting tools can reduce admin from 5+ hours/week to under 30 minutes, recovering hours that can be billed or used for better job planning.

Yes — always include your own labour at your market hourly rate even if you're a sole trader. If you don't, you're hiding the true cost of the job. A job that appears profitable on paper but doesn't account for 10 hours of your time at £45/hour isn't actually profitable — it's just unpaid labour.

Net profit margin = (revenue − total costs) ÷ revenue × 100. Total costs include materials, labour (including your own time at market rate), job-specific overheads (hire, skip, parking), and a proportion of your fixed overheads (van, insurance, tools). The calculator above does all of this automatically when you enter your revenue and cost figures.

The most common causes are: forgetting to include their own time, not accounting for material wastage, omitting overhead allocation, not including non-billable time (site visits, quoting, admin), and pricing on gut feel rather than a structured cost build. Systematic underquoting over a year can result in thousands of pounds of lost profit that never shows up on any invoice.

Fixed overheads include: van depreciation and running costs (typically £4,000–£8,000/year), public liability insurance (£500–£1,500/year), tools and equipment (£1,000–£3,000/year), accountancy (£500–£1,500/year), phone/software/marketing (£500–£1,000/year), and workwear/PPE. Divide your annual fixed overhead total by your annual billable hours to get an overhead rate per hour to add to each job.

Smaller jobs typically yield lower margins because fixed costs (travel, setup, quoting) are spread across less revenue. A 1-hour call-out job with £40 of travel costs starts with a 15–20% overhead drag before any materials or labour. Larger projects spread these fixed costs more efficiently, which is why many tradesmen set minimum job charges (typically £80–£150) to ensure profitability on small jobs.