What is the difference between markup and margin?

Markup is profit measured against what the job cost you. Margin is the same profit measured against the price you charged. Because the price is always the bigger number, the margin is always the smaller percentage.

If I add 20% to my costs, what margin do I make?

Sixteen point seven percent. A job costing $10,000 priced at $12,000 makes $2,000, and $2,000 out of $12,000 is 16.7%.

What markup do I need for a 20% margin?

Twenty-five percent. To keep a fifth of the price you have to add a quarter to the cost. The formula is markup equals margin divided by one minus margin.

Does this work outside Ontario?

Yes. Markup and margin are arithmetic. This page is correct in every province, state and country.

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Markup and margin calculator

Add twenty percent to your costs and you keep sixteen point seven, not twenty. Enter one job and see the price, the profit, both percentages, and what the mix-up is worth in dollars.

What the job costs you

Materials, labour, subcontractors, equipment. Everything you have to spend to hand the job over.

How do you price it?

I add a markupI want to keep a marginI already quoted a price

A percentage added on top of what the job costs you. This is what most quotes are built from, and it is not your margin.

Markup you add to cost

Filled in with an example so the page answers before you type anything. Change any field and the answer, and the link to it, become yours.

Price

$12,000.00

$2,000.00 of it is profit.

What you actually keep

16.7%

You added 20%. The margin is 3.3 points lower, every time.

To actually keep 20% of the price on this job

You would have to add 25% to your cost instead of 20%, and quote $12,500.00. On this one job the difference is $500.00. On ten jobs like it, $5,000.00.

How that was worked out

What the job costs you
materials, labour, subs, equipment
$10,000.00
Price
$10,000.00 + 20% of cost = $12,000.00
$12,000.00
Profit in dollars
$12,000.00 - $10,000.00 = $2,000.00
$2,000.00
Markup, as a share of cost
$2,000.00 / $10,000.00 = 20%
20%
Margin, as a share of price
$2,000.00 / $12,000.00 = 16.7%
16.7%

The conversion, both ways

Markup you add	Margin you keep	Markup needed for that margin
10%	9.1%	11.1%
15%	13%	17.6%
20%	16.7%	25%
25%	20%	33.3%
30%	23.1%	42.9%
35%	25.9%	53.8%
40%	28.6%	66.7%
50%	33.3%	100%
60%	37.5%	150%
100%	50%	no price reaches it

Read the middle column when somebody tells you what they mark up. Read the right-hand column when you decide what you want to keep.

Questions this page answers

What is the difference between markup and margin?: Markup is profit measured against what the job cost you. Margin is the same profit measured against the price you charged. Because the price is always the bigger number, the margin is always the smaller percentage.
If I add 20% to my costs, what margin do I make?: Sixteen point seven percent. A job costing $10,000 priced at $12,000 makes $2,000, and $2,000 out of $12,000 is 16.7%.
What markup do I need for a 20% margin?: Twenty-five percent. To keep a fifth of the price you have to add a quarter to the cost. The formula is markup equals margin divided by one minus margin.
Does this work outside Ontario?: Yes. Markup and margin are arithmetic. This page is correct in every province, state and country.

Or price the job with the margin already in it

Build the quote line by line and the markup sits on each line where you can see it, with the margin computed as you go. You set the number on purpose instead of adding a round percentage and hoping.

Then the accepted quote becomes the invoice, tax and holdback and all, and the win rate on everything you have quoted tells you whether the number was right.

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