Check markup and estimated margin in an HVAC quote draft

Agree the calculation boundary first

Take one approved estimating scenario and identify the cost basis, proposed selling price, included categories and exclusions. Ask AI to extract the numbers and label each percentage as markup or estimated margin. Do not ask it to recommend an ideal percentage, infer missing costs or choose customer pricing. The estimator and appropriate financial owner define the basis used by the business.

Keep estimated quote economics separate from actual job results. A calculation based on selected material and labor costs cannot establish net profit when overhead, rework or other categories are absent. Put that boundary beside the calculation so it remains visible when the worksheet is copied into a review.

Work a fictional denominator mismatch

Assume a fictional approved cost basis of $8,000 and a proposed selling price of $10,000. The $2,000 difference is 25% of cost, so markup is 25%. It is 20% of selling price, so estimated margin on that stated basis is 20%. These figures are examples, not suggested targets or evidence of achievable HVAC margins.

If someone instead adds 20% to the $8,000 cost, the selling price becomes $9,600. The $1,600 difference divided by $9,600 is approximately 16.7%, not 20%. Ask the reviewer which percentage was intended. Do not silently change the quote to $10,000 simply because one interpretation seems commercially preferable.

Verify the math and preserve approval

For a supplied target margin m below one and a positive approved cost C, the mathematical price on that simplified basis is C divided by one minus m. Show the assumptions and reject undefined cases such as a zero selling-price denominator. Recalculate independently with a spreadsheet or calculator rather than accepting the assistant’s prose as proof.

Give the reviewer a table containing source/version, cost basis, selling price, difference, markup, estimated margin and missing inputs. Keep discount and tax treatment under the company’s own approved definitions. Record the actual pricing decision and preserve the historical version. The assistant should neither update the pricebook nor send the quote. Evaluate the pilot on denominator errors detected and corrections required, not promised profitability.

Review checklist

• State included and excluded costs.
• Label the denominator of each percentage.
• Check the arithmetic outside the model.
• Require an authorized pricing decision before changing a quote.

Source context and limits

Jobber distinguishes markup from estimated margin in its quote documentation; availability is plan-dependent. Our simplified fictional calculations are an estimating review method, not accounting treatment, a pricing recommendation or a forecast of actual profit.