Security & low voltage
Security Margin Calculator
Works margin on security work, where recurring revenue changes the whole picture.
Result
Markup is measured against your cost, margin against the price you charge. A 50% markup is a 33.3% margin, not a 50% one. Pricing off the wrong one is the most common way a job that looked profitable turns out not to have been. Gross profit is what is left after the cost of doing the job. Overhead comes out of that: the building, the office wages, the vans, insurance, software and advertising. A healthy gross margin still loses money if overhead is larger.
Get a Free Business AuditHow the calculation works
Margin is gross profit as a share of price, calculated against revenue rather than cost, with the equivalent markup always higher. Both are shown. In security the figure to look at is not one margin but two: the installation margin, which is a one-off and constrained by visible hardware pricing, and the recurring monitoring margin, which is high and compounds for as long as the customer stays. A business judging itself on installation margin alone is measuring the smaller half.
What moves the number
- Installation margin, constrained by hardware price visibility.
- Recurring monitoring margin, which is far higher and compounds.
- Attrition, which determines how much recurring margin is actually realised.
- Whether equipment subsidy is being charged against installation or acquisition.
Where this one goes wrong
Accounting for an equipment subsidy as a negative installation margin misreads the business. Subsidised equipment is a customer acquisition cost against the recurring revenue, and treating it as a loss on the install makes the installation business look broken while hiding whether acquisition is paying back. Separate the two. The related discipline is tracking recurring margin net of attrition, because a book with high gross monthly margin and heavy cancellation realises far less than the figure suggests.
Before you quote
- Measure installation and recurring margin separately.
- Treat equipment subsidy as acquisition cost, not an installation loss.
- Discount recurring margin by realistic attrition.
Questions
About this calculator
Why measure installation and monitoring margin separately?
Because they behave completely differently. Installation is a constrained one-off, while monitoring is high margin and compounds for the customer's life. Blending them hides whether either is working, and it particularly hides whether equipment subsidies are paying back.
How should equipment subsidy be accounted for?
As a customer acquisition cost against the recurring revenue, not as a loss on the installation. Treating it as an installation loss makes the install business look broken and obscures the actual question, which is whether the subsidy is repaid over the customer's life.
Does attrition affect margin?
Substantially, because recurring margin is only realised while the customer stays. A book showing strong monthly margin with heavy cancellation delivers far less than the headline suggests, and the subsidy spent winning those accounts is not recovered. Margin net of attrition is the honest figure.
The formula
margin = (price - cost) / price; markup = (price - cost) / cost
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How to use this calculator
- Price charged ($). Enter your own figure; the page starts at $2,400.
- Direct cost ($). Enter your own figure; the page starts at $1,400.
The result updates as you type, so you can try a figure, see what it does to gross margin, and change it back. Nothing you enter is sent anywhere or saved.
A worked example
These are the figures the calculator opens with. Every number in the results column below is produced by the same calculation the page runs, so you can follow it through before putting your own figures in.
What goes in
| Input | Value |
|---|---|
| Price charged | $2,400 |
| Direct cost | $1,400 |
What comes out
| Result | Value |
|---|---|
| Gross margin main result | 41.7% |
| Gross profit | $1,000 |
| Same thing as a markup | 71.4% |
That job earns $1,000 of gross profit, a 41.7% margin. The same job described as a markup is 71.4%.
How sensitive the answer is
Holding everything else steady and changing only price charged, this is what happens to gross margin. It is worth knowing which of your inputs the answer actually hinges on, and which barely move it.
| Price charged ($) | Gross margin |
|---|---|
| $1,200 | -16.7% |
| $1,800 | 22.2% |
| $2,400 example above | 41.7% |
| $3,600 | 61.1% |
| $4,800 | 70.8% |
Every other input is held at the example value while this one changes, which is not how a real job behaves. Treat it as a guide to which number matters most, not as five separate quotes.
What each figure means
- Price charged ($)
- A money amount, starting at $2,400.
- Direct cost ($)
- A money amount, starting at $1,400.
What the results tell you
| Result | What it is |
|---|---|
| Gross margin | The headline result. A percentage. |
| Gross profit | A money figure. |
| Same thing as a markup | A percentage. |
Estimating is the easy part
The jobs you never hear about cost more than the ones you mis-measure. BDEVY builds the marketing, systems and automation that bring them in.