February 18, 2026
4 min read
Quickestimate
What Is the Margin Health Indicator?
The Margin Health Indicator is a live signal at the top of every estimate that tells you, at a glance, whether your current pricing is set to hit your profit target. It updates automatically every time you change a cost, adjust overhead, or modify your target margin.
Think of it as a sanity check — a visual guardrail that prevents you from sending a proposal priced at a loss or below your minimum acceptable profit.
The indicator compares your projected margin (based on your current costs and proposed sale price) against your target margin (set in your company settings or overridden per estimate).
Reading the Indicator Colours
How Margin Is Calculated
QuickEstimate uses gross profit margin — the standard in the construction industry — not markup percentage. These are fundamentally different calculations and it's critical to understand the difference.
Total Costs = Direct Costs + Overhead allocated to this job
The Total Costs figure in this formula includes both your direct costs (materials, labor, equipment, subs) and your overhead allocation for the project. This is why setting your overhead % accurately is so important — a wrong overhead figure produces a misleading margin reading.
Why Margin Matters More Than Markup
Many contractors think in terms of markup — adding a percentage on top of costs. The problem is that markup and margin produce different results, and confusing them is one of the most common causes of underpricing in the trade industry.
| Metric | Formula | Example (on $10,000 costs) |
|---|---|---|
| 20% Markup | Costs × 1.20 | Sale price = $12,000 → 16.7% margin |
| 20% Margin | Costs ÷ (1 − 0.20) | Sale price = $12,500 → 20% margin |
If your target is 20% profit margin and you're using 20% markup, you're actually earning 16.7% — leaving significant money on the table across hundreds of jobs a year. QuickEstimate always operates in margin terms to eliminate this confusion.
The "double-dip" trap: Some contractors accidentally apply their overhead percentage twice — once in their cost calculation and again in their markup. If your indicator shows green but your bank account tells a different story, check that your overhead is only entered in Settings, not also baked into individual line item costs.
Common Reasons Margins Go Red
- Underestimated labor hours — the most common cause. Add a contingency buffer of 10–15% to labor on complex jobs
- Using unconfirmed subcontractor estimates — rough verbal quotes often come in higher when formal bids arrive
- Forgetting waste factor on materials — offcuts, spillage, and delivery minimums add real cost
- Overhead % is too low — if your default was set with last year's costs and you've since hired staff or moved offices, it may be understated
- Competitive pressure leading to price cuts — discounting without adjusting costs is the fastest way to go red
Adjusting Your Estimate to Hit Your Target
When your indicator is yellow or red, you have four levers to pull:
Increase the sale price
The simplest lever. Use the Sale Price Override field in the totals panel to manually set a higher price. The system will show you the resulting margin in real time.
Reduce costs
Review your line items for any that can be reduced — cheaper material alternatives, tighter labor hours, renegotiating a sub bid. The system recalculates as you edit.
Lower your target margin for this job
Sometimes a strategic job warrants a lower margin. Override the target margin just for this estimate without affecting your global settings. The indicator will turn green at the new target.
Review your overhead percentage
If multiple estimates are consistently red even with reasonable pricing, your overhead % may need recalculating. See the Calculate Your True Overhead % guide.
Setting Your Margin Target
Your default profit margin target is set in Settings → Company Profile → Default Profit Target. Most trade contractors target between 10% and 20% net margin after overhead, though this varies significantly by trade, location, and business size.
A good rule of thumb: Set your target margin at the minimum acceptable profit you'd take on any job — not your ideal margin. Use the Sale Price Override field to price above it when the market allows. This way, the indicator is a floor, not a ceiling.
You can override the margin target on a per-estimate basis without changing your global default. This is useful for loss-leader projects, repeat clients who negotiate lower rates, or high-volume lower-margin work where you're making it up in volume.