Why report margin points lost instead of leakage as a share of revenue?

Because points compare margin rates directly, even when invoiced revenue differs from the quote. Dividing leaked dollars by the quoted price gives the same answer only when you billed exactly the quoted price.

Can margin leakage be negative?

Yes: negative leakage means the job earned more margin dollars than quoted, from faster cycles, cheaper material or billed extras. If most jobs close under estimated cost, your estimates run high and may be losing you quotes.

Should actual margin use the quoted price or what we invoiced?

Use invoiced revenue, net of credits, so price concessions and short shipments show up as revenue shortfall. Billed extras for customer changes raise invoiced revenue, so check their cost reached actual job cost too.

What review trigger should I set?

Pick one from your own close-out history that flags the number of jobs your team can really review. The 5 points in the example is an illustration, not an industry standard.

Contract Manufacturing, Job Shop Quoting & Make-to-Order calculator

Margin Leakage Calculator

Measure how much gross margin a job leaked between the quote and the job cost report, and whether it lost enough points to review. You need quoted price and cost, invoiced revenue, actual cost and your trigger.

What this calculator does

Gross margin a job lost between quote and close-out, split into cost overrun and revenue shortfall, against your review trigger.

Formula used

Quoted gross margin = quoted job price − quoted job cost; actual gross margin = invoiced revenue − actual job cost
Margin leakage = quoted gross margin − actual gross margin = revenue shortfall + cost overrun
Revenue shortfall = quoted job price − invoiced revenue; cost overrun = actual job cost − quoted job cost
Margin points lost = quoted gross margin ÷ quoted job price × 100 − actual gross margin ÷ invoiced revenue × 100
Points over review trigger = margin points lost − review trigger

Inputs explained

Quoted Job Price: Price on the accepted quote or purchase order.
Quoted Job Cost: Total cost in the estimate the quote was built on.
Invoiced Revenue: Billed to the customer for this job, net of credits.
Actual Job Cost: Job cost report at close-out, or your forecast at completion.
Review Trigger: Margin points lost that send a job to post-job review.

How to use the result

Best suited to job close-out review, mid-job forecast on a long program, ranking customers by margin lost.
Shows which side leaked, not which operation; compare routing hours and material line by line. A forecast at completion is only as good as its estimate of the remaining hours.

Current U.S. benchmarks

The U.S. prime lending rate is 7.00% (Federal Reserve via FRED, 2026-10-02). Payback and financing math should start from today's rate, not a remembered one.

Common questions

Why report margin points lost instead of leakage as a share of revenue? Because points compare margin rates directly, even when invoiced revenue differs from the quote. Dividing leaked dollars by the quoted price gives the same answer only when you billed exactly the quoted price.
Can margin leakage be negative? Yes: negative leakage means the job earned more margin dollars than quoted, from faster cycles, cheaper material or billed extras. If most jobs close under estimated cost, your estimates run high and may be losing you quotes.
Should actual margin use the quoted price or what we invoiced? Use invoiced revenue, net of credits, so price concessions and short shipments show up as revenue shortfall. Billed extras for customer changes raise invoiced revenue, so check their cost reached actual job cost too.
What review trigger should I set? Pick one from your own close-out history that flags the number of jobs your team can really review. The 5 points in the example is an illustration, not an industry standard.

Related guides

Last reviewed 2026-10-01.