Markup vs margin

Markup on the cost. Margin on the price.

Your cost and your price in euro give the profit, the markup and the margin. A margin you want gives the price that earns it.

Profit
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Markup on cost
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Margin on price
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Price for that margin
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Worked out on this page. Nothing you type is sent or kept.

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How the calculator works it out

The price for a margin needs only your cost and the margin you want.

The profit is exact to the cent. Markup and margin are rounded to one decimal place. The price for a margin is rounded to the nearest cent.

A cost of zero gives no markup, and a price of zero gives no margin. A wanted margin of 100% or more gives no price.

The rule: one profit, divided two ways

Markup and margin measure the same profit. When the cost is above zero and the job makes a profit, the markup is always the larger of the two.

  • Profit: the price minus the cost
  • Markup on cost: the profit ÷ the cost × 100
  • Margin on price: the profit ÷ the price × 100
  • Price for a margin: the cost × 100 ÷ (100 minus the margin)
  • Margin from a markup: the markup × 100 ÷ (100 plus the markup)
  • Markup from a margin: the margin × 100 ÷ (100 minus the margin)

Markup and margin side by side

Each line is one job told both ways, worked with the calculator’s own arithmetic.

  • A 10% markup is a 9.1% margin
  • A 20% markup is a 16.7% margin
  • A 25% markup is a 20% margin
  • A 50% markup is a 33.3% margin
  • A 100% markup is a 50% margin
  • A 30% margin needs a 42.9% markup
  • A 40% margin needs a 66.7% markup

A worked example in euro

A job costs you €1,240 and is priced at €1,650. The profit is €410. That is a markup of 33.1% on the cost and a margin of 24.8% on the price.

A 30% margin on the same cost needs a price of €1,771.43: 1,240 × 100 ÷ 70, rounded to the cent. Adding 30% to the cost instead gives €1,612, which is a margin of 23.1%.

Where the office shows margin

From a quote’s first line, What you make shows the quote’s margin in money and as a percentage. Where the part on a quote line has a cost in the Price book, the line’s margin moves as the line’s price is typed.

On a wide screen, the Price book shows the Margin on each part and labour rate that has a cost. Before an invoice goes out, Cost so far on the job shows the margin against the agreed price, or against the hours and parts. Once one is out, What this job made on the job and Job profit under Performance show the job’s margin.

Warn when a job’s margin falls below, in Settings, takes a margin percentage, not a markup. A quote, a quote line or a job under that percentage is marked, so a line priced at a 25% markup sits under a warning set at 25%.

Questions, answered.

Does the office work out margin the same way?
Yes. Every margin in the office is the profit as a share of the price. A quote shows it to two decimal places and this calculator to one, so €1,240 against €1,650 reads 24.85% on a quote and 24.8% here.
Is VAT part of the margin?
For a business registered for VAT, no. The VAT it charges is not its income, and it can reclaim the VAT it pays on materials. A business that is not registered charges no VAT and reclaims none, so the VAT on its materials is part of its cost. The office holds cost and price before VAT on every quote, job, part and labour rate. The calculator adds and takes off no VAT.
Can the calculator give a price from a markup?
No. This calculator works out the price for a margin. The office sets a price from a markup only as a price list is brought in: Markup on cost where the price is blank prices each part with a blank or zero price at its cost plus that percentage. Raise prices in the Price book moves prices by a share of each price, not of the cost.
Can a margin be 100% or more?
No. A margin is a share of the price, so it stays under 100% while the cost is above zero. A markup has no ceiling. A 150% markup is a 60% margin, and a 300% markup is a 75% margin.
Can the margin warning differ by job or by customer?
No. Warn when a job’s margin falls below is one percentage for the whole firm. It is off until a percentage is set, and only the office sees it.

Read next.

Job costing

What each job has cost so far, by person and by bill, and what it made once invoiced.

Quotes

Priced from your price book and accepted online by typed name. A card deposit is optional.

VAT calculator

VAT added to a price or taken out of a total, at 23%, 13.5%, 9% or 0%, to the cent.

Two-thirds rule calculator

Whether the goods put a job at 23% or leave it at 13.5%, with the VAT to the cent.

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