How To Calculate Flooring Profit Margin
Quick answer
Profit margin = (sell price − cost) ÷ sell price × 100. To hit a target margin, sell price = cost ÷ (1 − margin). Markup is different: (sell − cost) ÷ cost. A 40% markup is only a 28.6% margin.
Definition
Profit margin is the share of the price the customer pays that you keep after the costs of the job. Markup is how much you add on top of cost.
Explanation
Mixing up margin and markup is the most common pricing mistake: adding 30% to cost gives a 23% margin, not 30%. Work out margin on the whole job, materials and labour together, and compare it with what your overheads need.
Markup vs margin
| Markup on cost | Margin on price |
|---|---|
| 25% | 20% |
| 33% | 25% |
| 50% | 33.3% |
| 67% | 40% |
| 100% | 50% |
Examples
- Job cost £1,650, sold for £2,400: profit £750, margin 31.25%, markup 45.5%.
- Carpet at £28/m² cost, 40% margin wanted: sell at £28 ÷ 0.6 = £46.67/m².
Summary
Price from margin, not markup, and check it on the whole job. PlanCutFit shows cost, sell and profit on every quote before you send it.
In depth
Margin on a real job
Margin on the whole job
Add up every cost: flooring, underlay, accessories, labour and extras. Then compare with the price, without VAT.
Cost
£1650.00
Profit
£750.00
Sell
£2400.00
Setting a price from a target margin
Sell = cost ÷ (1 − margin). For a 35% margin on a £1,650 job: £1,650 ÷ 0.65 = £2,538.
Frequently asked questions
- What margin should a flooring business aim for?
- It depends on your overheads. Many UK flooring businesses work to roughly 25–40% gross margin on the whole job; work out what yours needs to cover the van, premises, staff and your own wage.
- Is VAT part of the margin?
- No. Work margin out on prices without VAT.
Related resources
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