What Profit Margin Should a Builder Make in the UK?
The short answer
On main-contractor work we aim for 25–35% gross margin and about 10% net after overheads. Your own floor comes from your overheads plus the net profit you want, and it must be a margin on the price, not a markup on cost.
- Our targets on main-contractor work: 25–35% gross margin, about 10% net after overheads.
- Set your own floor: overheads as % of turnover + the net margin you want. 12% + 10% = no job below 22% gross.
- Margin is not markup. A 25% markup is only a 20% margin. Price = cost ÷ (1 − margin).
- Small jobs need a higher %. The overheads per job barely change, but the price is smaller.
"What margin should I be making?" is one of the first questions owners ask us. The honest answer is: it depends on your overheads, your job size and the profit you want. But there is a method, and there are targets that work.
This page gives you both. You get the construction profit margins we aim for on our own main-contractor work, and a 10-minute way to set your floor. Want us to check your own jobs? Book a free strategy call.
Gross margin vs net margin: the two numbers that matter
Two different margins get mixed up all the time. You need both.
- Gross margin: price minus the direct costs of the job (labour including your own days, subcontractors, materials, prelims), as a % of the price.
- Net margin: what's left after overheads too: vans, insurance, accountant, software, office, admin, marketing and your fixed salary.
- Overheads: the cost of running the business whether you have one job or ten.
A job can show a healthy gross margin and still lose money once overheads are paid. That's why you set the gross target from the net profit you want, not the other way round.
The margins we aim for
On main-contractor work we aim for 25–35% gross margin and about 10% net after overheads. These are targets for a well-run building business, not an industry average.
You'll see much lower figures quoted for the UK's biggest contractors. They work on huge turnover and thin margins. A builder turning over £300K or £3M can't survive on that, because the overheads per job are far higher as a share of the price.
Still not sure your margins are high enough?
Book a free call with our team. We'll check your margins job by job and show you where the money goes.
Set your own margin floor in 10 minutes
Your floor is the lowest gross margin you'll accept on any job. Below it, the job doesn't pay for the business.
| Step | Example |
|---|---|
| 1. Add up 12 months of overheads, including a fixed salary for you | £60,000 |
| 2. Divide by the turnover you expect | £60,000 ÷ £500,000 = 12% |
| 3. Decide the net margin you want | 10% |
| 4. Add them: that's your gross margin floor | 12% + 10% = 22% |
| 5. Add a buffer for risk and small jobs | Aim for 25–35% |
The example is illustrative. Use your own figures from your accounts.
Leaving your own wage out of the overheads. Then your "profit" is really your salary, and the business makes nothing.
Markup vs margin: the table every builder should pin up
Markup is added to cost. Margin is the share of the price you keep. Mixing them up is one of the most expensive mistakes in construction.
| If you add (markup) | You keep (margin) | Price on £10,000 of cost |
|---|---|---|
| 15% | 13.0% | £11,500 |
| 20% | 16.7% | £12,000 |
| 25% | 20.0% | £12,500 |
| 33% | 25.0% | £13,333 |
| 43% | 30.0% | £14,286 |
| 50% | 33.3% | £15,000 |
| 54% | 35.0% | £15,385 |
The formula that stops underpricing: price = cost ÷ (1 − margin). For a 30% margin on £10,000 of cost: £10,000 ÷ 0.70 = £14,286.
Not sure your prices are hitting your margin?
Book a free call and we'll check them with you.
Why small jobs need a higher margin
Your overheads don't shrink on a small job. The van, the insurance, the admin and the time spent pricing are much the same for an £8,000 job as for an £80,000 one.
| £8,000 bathroom | £80,000 extension | |
|---|---|---|
| Time to quote, visit and admin | ~1 day | ~3 days |
| Overheads carried at a fixed £1,200 per job | 15% of price | 1.5% of price |
| Gross margin needed for 10% net | ~25% or more | ~12% or more |
The figures are illustrative. The point: if you price small and large jobs at the same percentage, the small ones quietly lose money. Either price them higher, set a minimum job size, or stop taking them.
Margins on materials and subcontractors
Supply materials yourself and add a margin. You carry the ordering, the returns, the risk and the cash until you're paid. Letting the client buy materials feels cheaper for them, but you lose margin and control of the programme. Supplying them often adds 20–30% more on that part of the job.
For client-chosen items, use an allowance in the quote, for example "tiles: £35/m² supply allowance". Anything above it is a variation.
Put your margin on every subcontractor package too. You're managing the sub, carrying the risk and guaranteeing the work. Get two or three prices with the same scope for each package; an unusually cheap one usually means something is missing.
Margins by trade
Each trade loses margin in different places. Our trade guides go through the numbers line by line:
- Electrical: testing, certification and changes after first fix. Electrical contractor margins.
- Plumbing and heating: kit priced on markup and call-outs that don't cover their travel. Plumbing business margins.
- Plastering: backgrounds, making good and drying time. Plastering business margins.
- Decorating: prep on poor surfaces and extra coats. Decorating business margins.
- Roofing: rain, scaffold time and rotten timber found after you start. Roofing business margins.
- Carpentry and joinery: workshop hours nobody counts and timber bought at last month's price. Carpentry and joinery margins.
What good margins look like in practice
Adam & Ali had been stuck at around £500K a year. They worked one-to-one with Sviat for four months. They signed £91,796 in 8 days at up to 46% margin, then a £528K project at about 34% margin, around £175–180K estimated profit.
£528K project at ~34% margin
Adam & Ali: from stuck at £500K to bigger, higher-margin projects in 4 months. Individual results, not typical or guaranteed.
That's the difference between a standard program and one-to-one mentoring from someone who runs a construction company today. Sviat Jay runs Craftex and works with each owner on their own numbers, so the margin fixes fit your business, not an average. To see where your own margin leaks, book a free strategy call.
If your margin is fine on paper but there's still nothing in the bank, read why busy builders make no profit. To score your pricing, cash and systems in 4 minutes, take the free Construction Business Scorecard.
The Builder's Pricing Playbook
The 7-step pricing method with £ examples, a pricing score and worksheets. 13 pages, free.
Get the free guideMargin checklist
This is general information from a contractor's experience, not financial advice. For your situation, speak to your accountant. On the tools and under £500K a year? Watch our free training first.
Before you go
- You know your overheads as a % of turnover, including your own salary
- You have a gross margin floor and never quote below it
- You price with cost ÷ (1 − margin), not a markup from memory
- Small jobs carry a higher margin or a minimum price
- Materials and subcontractor packages carry your margin
