Markup and margin describe the same profit from two directions, and mixing them up is one of the most common pricing mistakes in a small business. Markup is profit as a percentage of what the item or job cost you. Margin is profit as a percentage of the selling price. A 50% markup is only a 33% margin. This calculator takes your cost and any one of markup, margin or selling price, and shows the other two, the profit, and what common markups would charge.
Selling price with a markup: price = cost × (1 + markup ÷ 100). A $80 cost with a 25% markup sells at $100.
Selling price for a target margin: price = cost ÷ (1 − margin ÷ 100). To make a 25% margin on an $80 cost you need to charge $106.67, not $100.
From a known price: markup = (price − cost) ÷ cost, and margin = (price − cost) ÷ price. To convert a margin into the markup that produces it: markup = margin ÷ (1 − margin).
Many businesses set a target margin — often from an accountant or an industry benchmark — and then add that percentage to their costs as a markup. Because markup is calculated on the smaller number, the result is always a lower margin than intended. Aim for 30% margin by adding 30% to costs and you actually make 23%.
The gap widens as the percentages rise: a 100% markup is a 50% margin. If you quote with markup but report with margin, write both on the job sheet so nobody has to convert in their head.
On a job quote, markup usually has to cover overhead — insurance, vehicles, office time, tools, unbilled estimating — as well as profit. Work out overhead as a share of your annual job costs first, then add the profit you want on top. A markup that only covers profit leaves overhead to eat it.
Some contractors mark up materials and labour differently, or add a separate markup on subcontracted work. The calculator works per line: run it once for materials and once for labour, then add the results.
For products, remember the costs that are not on the supplier invoice: shipping in, card processing fees, marketplace commission, returns and packaging. Include them in the cost figure, otherwise the margin shown is the margin before those costs, not what you keep.
Keystone pricing — doubling the cost — is a 100% markup and a 50% margin. It is a convention in some retail sectors, not a rule.
Markup is profit divided by cost; margin is profit divided by selling price. On a $100 cost sold for $150, the $50 profit is a 50% markup and a 33.3% margin.
Markup = margin ÷ (1 − margin). A 20% margin needs a 25% markup; a 30% margin needs about 42.9%; a 50% margin needs 100%.
Multiply the cost by 1.30. A $200 cost with a 30% markup sells for $260, a profit of $60 and a margin of about 23.1%.
There is no single right number: it has to cover your own overhead plus the profit you want, and both vary by trade, region and business size. Work out overhead as a share of annual job costs from your books, then add profit on top.