Profit on Cost (POC) is a vital profitability metric in UK property development finance, expressing net profit as a percentage of total development costs. It is calculated by dividing net profit by overall costs, then multiplying by 100. Unlike metrics focused on sales value, POC highlights cost efficiency and project viability by comparing profit directly with expenditure. This measure is crucial when assessing whether a development meets lender or investor return requirements, helping developers to evaluate if the expected profit justifies the risks and capital committed to the scheme within the UK property market.
This sits beneath Project-Level Profitability, introducing a more specific variant of the measure without changing its core interpretation. It is commonly considered alongside Development Margin on Cost, as both are closely related measures used to assess similar aspects of performance or risk. In funding terms, Profit on Cost (POC) is most commonly encountered in connection with Participating Above Equity Multiple (e.g. 15x) within the property development capital stack.
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