Accountants Project Profit Calculator
Estimate a project's total costs, profit, profit margin and break-even revenue from revenue and key cost categories.
Overview
Use this Accountants' Project Profit Calculator to compare project revenue with direct costs, subcontractor costs, internal labour and allocated overhead. It estimates total cost, project profit, profit margin and the revenue required to break even.
How it works
The calculator adds materials, subcontractor costs, internal labour and allocated overhead to find total project cost. It subtracts this total from project revenue to estimate profit. Profit margin is calculated by dividing estimated profit by revenue, then multiplying by 100. Break-even revenue equals the total entered project cost because that is the point where profit is zero.
How to use this calculator
- 1Enter the revenue expected or invoiced for the project.
- 2Add materials and other direct project costs.
- 3Enter subcontractor payments and the internal labour cost.
- 4Include the overhead amount allocated to the project.
- 5Review profit, margin and break-even revenue before finalising pricing or reporting.
Example Calculation
Project revenue
$30,000
Materials and direct costs
$5,000
Subcontractor costs
$4,000
Internal labour cost
$6,000
Allocated overhead
$3,000
Estimated project profit
$12,000
With revenue of 30,000 and total project costs of 18,000, estimated project profit is 12,000 and the profit margin is 40.0%.
Frequently asked questions
What is project profit?
Project profit is the revenue from a project minus the direct costs, labour, subcontractor costs and overhead allocated to it.
How is project profit margin calculated?
Profit margin is estimated by dividing project profit by project revenue and multiplying the result by 100.
Should internal employee time be included as a project cost?
Usually, include the cost of employee time when evaluating project profitability. Use a cost basis that is consistent across projects.
What overhead should be allocated to a project?
This can include a reasonable share of indirect costs such as management, office space, software, insurance and administration, using your usual allocation method.
What does break-even revenue mean?
Break-even revenue is the amount of revenue needed to cover the entered project costs. At this level, estimated profit is zero.
Does the calculator include tax?
No separate tax calculation is included. Enter amounts on a consistent pre-tax or post-tax basis according to the reporting purpose and applicable rules.
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Assumptions and warnings
Assumptions
- All revenue and costs relate to the same project and use the same currency.
- Revenue and costs are entered before sales taxes, unless your reporting approach requires otherwise.
- Internal labour cost includes the cost basis you choose, such as pay, payroll costs and benefits.
- Allocated overhead reflects your own allocation method.
- Results are estimates and depend on the completeness and accuracy of the amounts entered.
Warnings
- This calculator provides an estimate only and is not accounting, tax or financial advice.
- Review project scope changes, unbilled work, contingencies and tax treatment before relying on the result for a business decision.