Quotation Profit Calculator
Price a job from your costs so the margin is built in, not discovered later.
Most quotations are built by adding up costs and then adding "some margin". This calculator builds them properly: direct cost, overhead recovery, a contingency for the things that go wrong, and a margin computed on the quoted value rather than on cost — plus a padded figure that survives the discount your client will ask for.
Job costs and margin
Result
Fill in the fields above and your result will appear here.
What the Quotation Profit Calculator does
Contractors, agencies, fabricators and service businesses all lose money the same way. The quote covers material and labour, someone adds 15% "for profit", and then site delays, an unbilled site visit and a 5% negotiated discount consume all of it.
The fix is structural. Overhead is recovered as a percentage of direct cost. Contingency is a separate, explicit line rather than optimism. Margin is applied by dividing rather than multiplying, so the target margin is what you actually get. And the discount is anticipated in the quoted figure instead of coming out of profit.
How to use this tool
- Enter material cost, then labour as person-days multiplied by your true cost per day — including allowances, not just the wage.
- Add equipment hire, transport and any subcontracted work.
- Set overhead recovery as a percentage of direct cost. Divide your annual office and admin cost by annual direct cost to find yours.
- Set a contingency. Five to ten percent is normal; use more where scope is uncertain.
- Set the target margin, the GST rate, and the discount you expect the client to negotiate.
- Quote the padded figure if a discount is inevitable — it lands you at the target margin after the negotiation.
Formula and method
Direct cost = Material + Labour + Equipment + Transport + Subcontract
Overhead = Direct cost × Overhead %
Contingency = (Direct + Overhead) × Contingency %
Total cost = Direct + Overhead + Contingency
Quote = Total cost ÷ (1 − Margin %)
Padded quote = Quote ÷ (1 − Expected discount %)
Financing = Total cost × Cost of capital × Payment delay ÷ 365
Dividing by (1 − margin) is what makes the margin correct. Multiplying by (1 + margin) applies a markup instead and produces a smaller margin than intended.
Worked example
Example: a job with ₹1,39,000 of direct cost
| Direct cost | ₹1,39,000 |
| Overhead at 12% | ₹16,680 |
| Contingency at 8% | ₹12,454 |
| Total cost | ₹1,68,134 |
| Quote at 20% margin | ₹2,10,168 |
| Padded for a 5% discount | ₹2,21,229 |
Quoting ₹2,21,229 and conceding 5% lands at ₹2,10,168 — exactly the target. Quoting the target and then conceding 5% would leave a margin of 15.8%.
What your result means
The quote figure is your floor for the target margin, before any negotiation.
The padded quote is what to actually put on the document when you know a discount will be requested. It is not a trick — it is pricing the negotiation in.
Real profit after financing is what many small contractors never calculate. A 45-day payment delay on a large job can quietly consume a fifth of the margin.
Important considerations
- Calculate your overhead percentage properly: total annual indirect cost divided by total annual direct cost. Guessing it is the most common source of underpricing.
- Contingency is not padding — it is the expected cost of the things that always happen on some jobs. Removing it to win a bid transfers that risk to your profit.
- Ask for an advance and stage payments. They reduce the financing cost and test whether the client can actually pay.
- Put a validity period on the quotation, especially where material prices move. Thirty days is standard.
- Define the scope precisely and price variations separately. Scope creep, not mispricing, is what usually destroys the margin on a job.
Limitations of this tool
- It prices one job. It does not model capacity, or whether taking this job displaces a more profitable one.
- Labour is treated as a simple day rate. Overtime, skill mix and productivity differences need separate handling.
- The financing estimate is a simple interest approximation on total cost, not a full cash-flow model with stage payments.
Frequently asked questions
How much margin should I quote?
It varies by trade and by risk. Fifteen to twenty-five percent is common for contracting work; agencies and specialist services often price higher. What matters is that overhead and contingency are covered separately, so the margin is genuinely profit.
Should I show my costs in the quotation?
Generally no. Quote a scope and a price. Itemising costs invites line-by-line negotiation and makes the contingency look like padding rather than risk pricing.
How do I calculate my overhead percentage?
Divide your total annual indirect costs — office rent, admin salaries, software, accountant, idle time — by your total annual direct costs. That ratio is what each job must recover.
What if the client wants a bigger discount than I planned?
Reduce scope rather than price. Removing an item preserves the margin; cutting the price alone comes straight out of profit, and the calculator above shows exactly how much.