The margin calculator shows an estimated gross margin on each proposal option, based on what the equipment, materials, labor, financing fees and commission will cost you. Its accuracy depends almost entirely on the cost data in your ServiceTitan Pricebook. This article covers what to set up and how each value moves the result.
What the margin calculator does
When the calculator is turned on, each proposal option shows a margin button next to the option total, for example 50.0% margin. Tapping it opens a Margin breakdown with the sale price, each cost line, gross profit, and how the option compares to your target margin.
Gross margin = (Option price − Total cost) ÷ Option price
Total cost = Equipment + Materials + Labor + Financing fee + Commission
Option price is the option's total before tax, after discounts and fees are applied. Rebates are not subtracted. The button and breakdown show the margin to one decimal place; the math itself is not rounded.
The button sits in the option header on the proposal screen. It is hidden when the calculator is off, when the option has no items, or while the option's totals are still loading.
Setup checklist
Work through these before turning the calculator on. Anything missing is counted as $0, which makes margin look better than it really is.
In your Pricebook
Every equipment and material item has a cost: a primary vendor cost, or failing that a Cost price.Synced from your ServiceTitan Pricebook. Primary vendor cost is used first when it exists.
Every item that is linked to another (materials linked to equipment, materials or equipment linked to a service) has a primary vendor cost.For linked items the Cost price is not read. See "Linked items" below.
Every service that represents labor has Hours set.Hours are the only way labor enters the calculation.
Your Pricebook has synced before proposals are built. An item's cost and hours are copied onto the proposal when the item is added.
In Settings → Financing Plans
Enable margin calculator is on. Margin Calculator section at the top of the Financing Plans tab.
Labor Rate is set in dollars per hour. You fully loaded labor rate should used.
Commission Rate is set as a percentage, if you want commission included in your gross margin calculation.
Target Margin is set as a percentage, if you want options colored against a goal.
Each financing plan has a Merchant Fee (%), if you want financing cost included. Financing Configurations list on the same tab; edit each plan. If you no want to factor in the merchant fee to gross margin, leave this field blank on all plans.
Pricebook items and how they count
Only active items in the option are counted. Each item's cost is multiplied by its quantity on the proposal.
Equipment and material cost
What it is - What the item costs you to buy.
Where it comes from - Your ServiceTitan Pricebook: the item's primary vendor cost, and its Cost price.
Which value wins -
Primary vendor cost, if the item has a primary vendor.
Otherwise the Cost price.
Otherwise $0.
Adds cost × quantity to the Equipment cost or Materials line. A primary vendor cost of $0 still wins over a non-zero Cost price.
Linked items
What it is - Items that ride along with another item, such as a line set linked to a condenser, or materials and equipment linked to a service.
Where it comes from - Equipment materials on equipment items; service materials and service equipment on services.
Which value wins -
The linked item's primary vendor cost.
If it has none, the linked item counts as $0.
Adds linked cost × linked quantity to Equipment or Materials, depending on the linked item's type.
Linked items count toward cost whether or not they are charged to the customer.
Service hours
What it is - The labor hours a service takes.
Where it comes from - The Hours field on the service in your ServiceTitan Pricebook.
Not used - A service's Cost price, and hours on equipment or material items.
Adds hours × quantity to the option's labor hours.
Labor cost is then total hours × Labor Rate.
A service without Hours adds no labor.
Margin Calculator settings
Find these under Settings → Financing Plans, in the Margin Calculator section. The rate fields are greyed out until the calculator is enabled. Changes are saved with the Save button below the section and apply to every proposal in your organization.
Enable margin calculator
Type - On / off. By defualt set to Off
Off: no margin button anywhere.
On: the button appears on every option that has at least one item.
Labor Rate
Unit - Dollars per hour, 0 or more. Defaults to $0.
Labor = Labor Rate × total service hours.
At $0 the breakdown still shows the hours, but labor costs nothing.
Commission Rate
Unit - Percent of sale, 0–100. Enter 5 for 5%. Defaults to 0%.
Commission = Commission Rate × option price (before tax).
Target Margin
Unit - Percent, 0–100. Enter 40 for 40%. Defaults to 0%.
Does not change the margin itself. It sets the color: at or above target green, below target red, no target grey when the target is 0%.
With a target set, the breakdown also shows how many dollars the option is above or below target and a Min price to reach target.
Min price = (Equipment + Materials + Labor) ÷ (1 − Target − Commission rate − Merchant fee rate)
Merchant Fee on a financing plan
Unit - Percent, 0–100. Enter 3.5 for 3.5%. Optional.
Where
Settings → Financing Plans → Financing Configurations → the plan's Merchant Fee (%).
Which plan
The plan selected on the option; if none, the proposal's default plan.
Financing fee = Merchant Fee × financed balance, where the financed balance is the option total including tax minus the proposal's down payment (never below $0).
The fee is $0 when financing is turned off for the option, when no plan applies, or when the plan has no merchant fee.
Worked example
An AC replacement option, priced at $12,000 before tax and $12,600 with tax. The customer puts $1,000 down and finances the rest on a plan with a 3.5% merchant fee. Settings: Labor Rate $65/hr, Commission Rate 5%, Target Margin 45%.
Line | From | Amount |
Condenser × 1 | Primary vendor cost $4,200 (Cost price $4,500 ignored) | $4,200.00 |
Line set × 1, linked to condenser | Linked item's primary vendor cost $150 | $150.00 |
Thermostat × 1 | No primary vendor, so Cost price $120 | $120.00 |
Install service × 1 | 8 hours × $65/hr | $520.00 |
Financing fee | 3.5% × ($12,600 − $1,000) | $406.00 |
Commission | 5% × $12,000 | $600.00 |
Total cost |
| $5,996.00 |
Gross profit | $12,000 − $5,996 | $6,004.00 |
Gross margin | $6,004 ÷ $12,000 = 0.50033 | 50.0% |
Min price to reach target | $4,990 ÷ (1 − 0.45 − 0.05 − 0.035) | $10,731.18 |
Versus target | $12,000 − $10,731.18 above target | +$1,268.82 |
The breakdown shows Equipment cost $4,200.00 and Materials $270.00 (the line set and thermostat together). If the line set had no primary vendor cost, it would count as $0 and the margin would read 51.3%, with no warning.
Why margin might be missing or wrong
No margin button at all.The calculator is off, the option has no items, or option totals have not loaded yet.
"Can't calculate margin".The option price is $0. Margin needs a sale price.
Margin looks too high.Some item has no cost, a linked item has no primary vendor cost, a service has no Hours, or Labor Rate is $0. Each of these counts as $0 silently. This will need to be verified in the ServiceTitan Pricebook.
Labor shows hours but $0. Labor Rate is $0 or was never saved.
Equipment cost differs from the Cost price you expected.The item has a primary vendor, and its vendor cost is used instead.
No financing fee line.The option has financing turned off, no plan is selected on the option or as the proposal default, or the plan has no merchant fee.
Pricebook changes don't show up.Costs and hours are copied when an item is added to a proposal. Items already on a proposal keep the values from when they were added.
Button is grey, not green or red.Target Margin is 0%.