How SetSale Calculates Net Profit
At SetSale, we want to help every member of your HVAC sales team price, pitch, and close deals with confidence. A crucial part of this is making sure every quote is structured for maximum profitability. SetSale’s automated pricing engine removes the guesswork and gives you a clear look at your costs and profits on every proposal.
This article breaks down how SetSale calculates net profit, using a real job quote as an example.
The core formula is simple:
NetProfit = Total Revenue − Total Costs
Here’s how SetSale automatically applies it.
Step 1: Calculate Your Total Cost
First, SetSale instantly calculates your
Total Cost. This number is the sum of all direct expenses for the job, pulled from your pre-loaded price book and company cost drivers.
Using the provided example:
Equipment Cost: $5,719.45
Labor: $576.00
Overhead: $1,259.09
Sales Commission: $0.00
Instant Rebates: -$1,000.00
SetSale adds these items together to get your Total Cost:
5,719.45 + 576.00 + 1,259.09 + 0.00 − 1,000.00 = 6,554.54
Step 2: Determine Your Total Revenue
Next, SetSale determines your Total Revenue. This is the price you charge the customer for the job itself, before adding any sales tax or special fees. It's calculated by adding your desired profit (the "Markup") to the Total Cost, ensuring every quote is consistent.
Total Cost: $6,554.54
Markup: $2,518.18
This gives you the Total Revenue:
6,554.54 + 2,518.18 = 9,072.72
Markup is only applied to the sum of labor costs and equipment costs.
Step 3: Calculate Your Net Profit
This is where you see the "More Profit" benefit of SetSale in action. The platform calculates your net profit in two clear ways: as a dollar amount and as a percentage margin.
Net Profit ($)
The dollar-value profit is your revenue minus your costs.
9,072.72 (Total Revenue) − 6,554.54 (Total Cost) = 2,518.18
Net Profit Margin (%)
The Net Profit Margin is a key performance metric that shows what percentage of your revenue is actual profit. SetSale displays this clearly on the quote so you always know how profitable a job is. If a discount causes the profit to fall below your set threshold, the number turns red as a warning.
The formula used is:
Net Profit Margin = (Total Revenue / Net Profit) ×100
Using our example's numbers:
(9,072.72 / 2,518.18) × 100=27.76%
This margin of 27.76% means that for every dollar of revenue from this job, about 28 cents is pure profit for your company.
Transparency in Pricing
To provide total transparency and an accurate picture of your profitability, SetSale separates your core business revenue from pass-through items like Sales Tax and Financing Fees. These items are added to the final Customer Price but are correctly excluded from your revenue and net profit calculations. This ensures the profit metrics you see are a true representation of the job's financial performance, helping you make smarter, more profitable business decisions.