Markup calculatorSelling price from cost and markup, and the margin it really leaves
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Markup vs. margin
| Markup | Margin it leaves |
|---|---|
| 10% | 9.1% |
| 15% | 13.0% |
| 20% | 16.7% |
| 25% | 20.0% |
| 30% | 23.1% |
| 40% | 28.6% |
| 50% | 33.3% |
| 75% | 42.9% |
| 100% | 50.0% |
Selling price
$500.00
- Profit
- $100.00
- Margin
- 20.0%
A 25% markup keeps 20.0% of the price as profit.
The formulas
price = cost × (1 + markup)
margin = markup ÷ (1 + markup)
markup for a target margin = margin ÷ (1 − margin)
Buy materials for $400 and add a 25% markup: you charge $500 and keep $100. That $100 is 25% of your cost but 20% of the price, so a 25% markup is a 20% margin. Doubling your cost (a 100% markup) is a 50% margin.
Why the gap matters
Overhead, taxes and slow months come out of revenue, not cost, so margin is the number that tells you what you keep. If you think in markup, check the margin before you send the quote. The profit margin calculator works the other way, from a target margin to a price.
Markup on every line in Tillage
In Tillage, each quote line can carry a variance buffer and profit margin, and the quote shows what you keep before you send it. Start from a free invoice template for your trade.
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Markup questions
How do you calculate markup?
Multiply your cost by one plus the markup. A $400 cost with a 25% markup is $400 × 1.25 = $500. The $100 difference is your profit.
What’s the difference between markup and margin?
Markup is profit as a percentage of your cost. Margin is profit as a percentage of the price. A 25% markup on $400 makes $100 profit, which is 25% of the cost but only 20% of the $500 price.
What markup do I need for a 30% margin?
Divide the margin by one minus the margin: 0.30 ÷ 0.70 = 42.9%. Or use the profit margin calculator, which works out the price for a target margin from your cost.
Should contractors mark up materials?
Many do, to cover the time spent ordering, picking up and handling materials, and the risk of returns. Whatever you choose, put the marked-up price on the invoice line and check the margin it leaves.
