How to calculate plumbing job profit

Job profit is what remains after the costs of doing the work, including a share of overhead, and before tax you collect for HMRC. It is not the difference between the customer total and the materials on the van.

Start with materials. Quantity times unit cost is the base. Waste increases that cost: ten metres at £4 with 10% waste is £44 of internal cost, not £40. Selling value applies your markup to the cost that includes waste. At 25% markup the same line sells for £55.

Labour has two rates. Internal cost is what the hour costs the business. The customer rate is what the quote charges. Two hours at £25 internal and £65 to the customer is £50 of cost and £130 of selling value. An overtime multiplier applies to both, so time-and-a-half does not only inflate the price.

Direct cost is materials (with waste), labour at the internal rate, other direct costs such as parking or hire, and subcontract cost. Overhead is a percentage of that direct cost. Ten percent of £150 is £15, so the true cost is £165. If you forget overhead, the profit is overstated by that £15 on every similar job.

The pre-tax price starts from selling values: materials, labour at the customer rate, customer-facing charges, call-out and any emergency uplift, minus a discount. In the example above, with no other charges, the pre-tax price is £255. Gross profit is £255 − £165 = £90. Margin is about 35.3%. Markup on the true cost is about 54.5%.

VAT, if you charge it, is calculated on the pre-tax price. At 20% the tax is £51 and the customer total is £306. A 20% deposit is £61.20 and the balance is £244.80. Deposit comes off the amount the customer pays, not off your cost.

If your target margin is 40%, the required pre-tax price is £165 / 0.60 = £275. You need £20 more before VAT, and the VAT-inclusive total becomes £330. That increase should be a decision, not an automatic change.

Use the quote profit calculator for a single job, or the app when you want a PDF that hides the internal figures.