Specialist contractors lose money every week through the margin-vs-markup confusion. Someone says "we need 20% on this" — but is that 20% margin or 20% markup? They are not the same. A 20% markup gives you only 16.7% margin. On a £100,000 cost base, the difference is £4,167 — gone, every time the error is repeated.
But the confusion is only half the problem. The bigger issue is that most specialist contractors apply markup without first knowing what markup they actually need to recover overheads AND hit their target margin. They guess. They use industry rules of thumb. They copy what someone told them on their last job. And they end the year wondering why their cash position is tighter than the management accounts suggested it would be.
This workbook handles both halves of the problem.
STRATEGIC — given your annual overheads, expected turnover, and target net margin, what single markup do you need to apply across every job to recover overheads AND hit your margin target? The Business Pricing Strategy tab walks the calculation through five steps, ends with one headline number, and runs an annual reconciliation that proves the maths balances.
TACTICAL — given a cost build-up on a specific job, what should you price at? How do three margin scenarios compare? If a main contractor says they'll only pay £X, what margin does that give you and should you accept? How much can you discount before you hit your floor?
The strategic answer feeds the tactical answer. Build your overhead base once, derive your tender markup, then apply it consistently to every job.
