Calculate the real margin on a used car deal and understand purchase-to-sale spread, net profit, sale margin and ROI.
Written and reviewed by FlipTrack Editorial Team
Definitions used in this guide
| Measure | Formula | What it shows |
|---|---|---|
| Headline spread | Sale price - purchase price | The gap before other costs |
| Net profit | Sale income - total cost | What remains after attributable costs |
| Sale margin | Net profit ÷ sale income × 100 | Profit as a share of revenue |
| ROI | Net profit ÷ total cost × 100 | Return on money invested |
Illustrative vehicle deal
| Item | Amount |
|---|---|
| Purchase price | £7,200 |
| Auction and collection | £310 |
| Mechanical and cosmetic preparation | £640 |
| MOT, checks and advertising | £150 |
| Total cost | £8,300 |
| Sale income | £9,600 |
| Net profit | £1,300 |
| Sale margin | 13.5% |
| ROI | 15.7% |
The visible purchase-to-sale spread is £2,400, but £1,100 of other costs reduces net profit to £1,300. Reporting the spread as profit would materially overstate the result.
This is an operating-deal model, not tax advice. VAT treatment, including possible eligibility for the VAT margin scheme, depends on the transaction and business circumstances. Keep complete records and obtain advice from HMRC or a qualified accountant.
How do car dealers calculate profit margin?
Subtract total attributable cost from sale income. Divide net profit by sale income and multiply by 100.
Is the difference between buying and selling price the profit?
No. It is only the headline spread. Preparation, selling, allocated overhead and post-sale costs must also be considered.
What is the difference between margin and ROI?
Margin compares profit with sale income. ROI compares profit with total money invested.
Does the calculator include VAT?
The calculator models income and costs but does not determine VAT treatment. Check HMRC guidance or speak to an accountant.
Use FlipTrack to keep the headline spread, total cost, net profit, sale margin and ROI separate on every vehicle.
Start free - no card required →Share this article
Related articles
How to Calculate ROI When Flipping a Car
7 min read · Profit Tracking
How to Track Profit When Flipping Cars in the UK (The Complete Method)
9 min read · Profit Tracking
Hidden Costs of Flipping Cars in the UK (Most Flippers Miss These)
6 min read · Profit Tips
How to Calculate Break-Even Price When Flipping Cars in the UK
6 min read · Profit Tracking