Winning more work feels like progress. A fuller diary, more vans on the road, more invoices going out — it looks like a business is growing. But turnover and profit are not the same thing, and plenty of busy trade businesses are quietly earning less than a much quieter competitor down the road.
Two Builders, Same Trade, Very Different Businesses
Take two building companies working in the same area, doing similar work:
| Annual Sales | Annual Profit | |
|---|---|---|
| Builder A | £400,000 | £20,000 |
| Builder B | £250,000 | £50,000 |
Builder A is turning over 60% more than Builder B, but taking home less than half the profit. On paper, Builder A looks like the bigger, more successful business. In reality, Builder B is running the healthier operation — less stressed, less exposed, and keeping far more of every pound that comes in.
This is one of the most common traps in the trades: chasing turnover because it feels like success, while the actual profit — the number that pays your wages, your tax bill and your future — goes in the wrong direction.
Where the Extra Turnover Actually Goes
When a business grows in sales but not in profit, the gap is almost always explained by a mix of underpricing and costs that never made it into the quote in the first place. Common culprits include:
- Fuel and vehicle running costs
- Parking and congestion charges
- Waste disposal and skip permits
- Small fixings and consumables
- PPE and tool wear and replacement
- Insurance and accountancy fees
- Credit card and payment processing fees
- Unpaid time spent quoting and chasing invoices
Individually these look small. Missed across dozens of jobs a year, they can be the entire difference between Builder A's margin and Builder B's.
What's a Realistic Profit Margin to Aim For?
There's no single number that fits every trade business — a solo plumber and a ten-person building firm carry very different overheads. As a rough guide, many profitable UK trade businesses aim for:
| Business Type | Typical Net Profit Margin |
|---|---|
| Sole Trader | 10–20% |
| Small Trade Business | 10–15% |
| Established Building Company | 8–15% |
| Specialist Contractors | 15–25% |
The goal isn't to chase the highest possible number — it's consistency, job after job. For the full breakdown of how to calculate your own margin correctly (and why it's not the same as markup), see our guide to calculating profit margin.
Don't Compete on Price Alone
One of the fastest ways to end up like Builder A is dropping prices simply to win the job. But price isn't always the deciding factor for customers. Many homeowners choose a tradesperson based on:
- Clear, professional-looking quotations
- Good communication throughout the job
- Realistic, reliable timescales
- Confidence the work will be done properly
A well-presented quote that protects your margin often wins the job over the cheapest one on the table — and it's far better for your business than winning everything and profiting from nothing.