Ratio of net profit to the development cost expressed as a percent.
Profit on Cost refers to net profit as a percentage of the development cost, a calculation used to analyze the return for developing a project. It is often used to compare across projects or co-relate with past projects. The common range of profit on cost for a typical project is between 0% and 50% (may not be applicable for a partial floor area of a project).
How this is calculated
Profit on Cost is calculated as a percentage of net profit over total development cost.
Formula:
Profit on Cost = (Net Profit ÷ Total Development Cost) x 100%
Applied to multiple places in the financial model for example:
All buildings - All Parcels
Per commercial use type - Parcel 1
Per residential use type - All Parcels
Other Equivalent Terms
Profit Margin
Margin on Cost
Developer Margin
Profit Percentage