Profit Margin Calculator
Find the real margin on a contract after direct and indirect cost, and the bid price you would have to submit to hit the margin you are actually aiming at.
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How the calculation works
Profit = contract price minus (direct cost plus indirect cost). Margin % = profit divided by contract price. To work backwards from a target: bid price = total cost divided by (1 minus the target margin). Note that a 10% mark-up on cost is only a 9.1% margin on price — the two are not the same number.
Frequently asked questions
What margin is normal in Saudi contracting?
It varies widely: 5-10% on large competitive works and 10-20% on smaller or specialised packages. Cost discipline matters far more than the target number itself.
Why does a job look profitable and then lose money?
Usually indirect cost that was never loaded onto it, variations executed without written instruction, or unmeasured waste. All three eat the margin quietly.
Is mark-up the same as margin?
No. Mark-up is taken on cost, margin on price. A 15% mark-up on cost is a 13% margin on price — quoting one while budgeting the other is a classic pricing error.
What counts as indirect cost?
Site overheads: supervision, site offices, temporary works, plant standing time, insurance and bonds, plus a share of head office cost. Here it is a percentage of direct cost.
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This calculator is also available in Arabic: حاسبة الربح.