Margin and markup are two ways to talk about the same profit, and mixing them up is an easy way to underprice a job. A 50% markup sounds like a healthy 50% profit. It is actually a 33% margin. Below you will find a full margin to markup chart, the reverse chart, the formulas, a worked service-job example and two calculators.
Markup = (price − cost) ÷ cost. It is the amount you add on top of cost.
Why it matters
Say a job costs you $100. Adding a 30% markup gives a price of $130 and a profit of $30. But $30 out of $130 is only a 23% margin. If your overhead needs a 40% margin, that job falls short even though you “added 30%.”
Markup and margin side by side: the short version
| Margin (share of price kept) | Markup needed on cost | On $100 of job costs, charge |
|---|---|---|
| 20% | 25% | $125 |
| 33.3% | 50% | $150 |
| 50% | 100% | $200 |
| 55% | 122% | $222 |
| 60% | 150% | $250 |
| 65% | 186% | $286 |
Margin needs a bigger markup than you expect
The markup on cost you need to keep each share of the price.
Illustrative numbers, from the table above.
To keep half of every dollar, you charge double your job costs. That markup is higher than most people guess. It is also why a price that felt fair can turn out to be too low once you add up the real job costs.
Margin to markup chart (5% to 80%)
Find the margin you want in the left column. The middle column is the markup you must add on top of your job costs to keep it. The right column shows the price for a job that costs you $100, so you can see the gap in dollars.
| Margin you want | Markup on cost you need | Price for a job that costs $100 |
|---|---|---|
| 5% | 5.3% | $105.26 |
| 6% | 6.4% | $106.38 |
| 7% | 7.5% | $107.53 |
| 8% | 8.7% | $108.70 |
| 9% | 9.9% | $109.89 |
| 10% | 11.1% | $111.11 |
| 11% | 12.4% | $112.36 |
| 12% | 13.6% | $113.64 |
| 13% | 14.9% | $114.94 |
| 14% | 16.3% | $116.28 |
| 15% | 17.6% | $117.65 |
| 16% | 19% | $119.05 |
| 17% | 20.5% | $120.48 |
| 18% | 22% | $121.95 |
| 19% | 23.5% | $123.46 |
| 20% | 25% | $125.00 |
| 21% | 26.6% | $126.58 |
| 22% | 28.2% | $128.21 |
| 23% | 29.9% | $129.87 |
| 24% | 31.6% | $131.58 |
| 25% | 33.3% | $133.33 |
| 26% | 35.1% | $135.14 |
| 27% | 37% | $136.99 |
| 28% | 38.9% | $138.89 |
| 29% | 40.8% | $140.85 |
| 30% | 42.9% | $142.86 |
| 31% | 44.9% | $144.93 |
| 32% | 47.1% | $147.06 |
| 33% | 49.3% | $149.25 |
| 34% | 51.5% | $151.52 |
| 35% | 53.8% | $153.85 |
| 36% | 56.2% | $156.25 |
| 37% | 58.7% | $158.73 |
| 38% | 61.3% | $161.29 |
| 39% | 63.9% | $163.93 |
| 40% | 66.7% | $166.67 |
| 41% | 69.5% | $169.49 |
| 42% | 72.4% | $172.41 |
| 43% | 75.4% | $175.44 |
| 44% | 78.6% | $178.57 |
| 45% | 81.8% | $181.82 |
| 46% | 85.2% | $185.19 |
| 47% | 88.7% | $188.68 |
| 48% | 92.3% | $192.31 |
| 49% | 96.1% | $196.08 |
| 50% | 100% | $200.00 |
| 51% | 104.1% | $204.08 |
| 52% | 108.3% | $208.33 |
| 53% | 112.8% | $212.77 |
| 54% | 117.4% | $217.39 |
| 55% | 122.2% | $222.22 |
| 56% | 127.3% | $227.27 |
| 57% | 132.6% | $232.56 |
| 58% | 138.1% | $238.10 |
| 59% | 143.9% | $243.90 |
| 60% | 150% | $250.00 |
| 61% | 156.4% | $256.41 |
| 62% | 163.2% | $263.16 |
| 63% | 170.3% | $270.27 |
| 64% | 177.8% | $277.78 |
| 65% | 185.7% | $285.71 |
| 66% | 194.1% | $294.12 |
| 67% | 203% | $303.03 |
| 68% | 212.5% | $312.50 |
| 69% | 222.6% | $322.58 |
| 70% | 233.3% | $333.33 |
| 71% | 244.8% | $344.83 |
| 72% | 257.1% | $357.14 |
| 73% | 270.4% | $370.37 |
| 74% | 284.6% | $384.62 |
| 75% | 300% | $400.00 |
| 76% | 316.7% | $416.67 |
| 77% | 334.8% | $434.78 |
| 78% | 354.5% | $454.55 |
| 79% | 376.2% | $476.19 |
| 80% | 400% | $500.00 |
Markups are rounded to one decimal place. Prices are for a job with $100 of job costs. Scale up for your own costs: $600 of job costs at a 40% margin is 6 × $166.67, or about $1,000.
Markup to margin chart (the reverse)
Already add a set markup to every job? Use this chart to see the margin it really leaves you. The margin is always smaller than the markup, and the gap grows as the numbers get bigger.
| Markup you add on cost | Margin you really keep | Price for a job that costs $100 |
|---|---|---|
| 10% | 9.1% | $110 |
| 15% | 13% | $115 |
| 20% | 16.7% | $120 |
| 25% | 20% | $125 |
| 30% | 23.1% | $130 |
| 35% | 25.9% | $135 |
| 40% | 28.6% | $140 |
| 45% | 31% | $145 |
| 50% | 33.3% | $150 |
| 60% | 37.5% | $160 |
| 70% | 41.2% | $170 |
| 75% | 42.9% | $175 |
| 80% | 44.4% | $180 |
| 90% | 47.4% | $190 |
| 100% | 50% | $200 |
| 125% | 55.6% | $225 |
| 150% | 60% | $250 |
| 175% | 63.6% | $275 |
| 200% | 66.7% | $300 |
| 250% | 71.4% | $350 |
| 300% | 75% | $400 |
Margin and markup formulas, in plain words
You only need two formulas. Write percentages as decimals, so 40% is 0.40.
- Margin to markup: markup = margin ÷ (1 − margin). For a 40% margin: 0.40 ÷ 0.60 = 0.667, a 66.7% markup.
- Markup to margin: margin = markup ÷ (1 + markup). For a 50% markup: 0.50 ÷ 1.50 = 0.333, a 33.3% margin.
- Price from job costs and a margin: price = job costs ÷ (1 − margin). For $600 of job costs and a 40% margin: $600 ÷ 0.60 = $1,000.
The last one is the one to use when quoting. It skips markup and goes straight from what the job costs you to the price that keeps the margin you chose.
Convert margin to markup (and back)
Type the margin you want to see the markup you need. Type the markup you use now to see the margin it really gives you.
Margin and markup calculator
Margin is the share of the price you keep after job costs. Markup is how much you add on top of job costs. Nothing you type is sent anywhere unless you choose to send it to us.
Service-job example: what markup keeps 40% on a $1,000 job?
Illustrative numbers. Say a two-person crew does a job that takes 5 hours each, counting drive time, loading and setup. That is 10 crew hours.
- Crew: 10 hours × $38 full cost per person-hour (wage plus payroll taxes, insurance and workers comp) = $380.
- Materials: $160.
- Vehicle and fuel: $60.
- Job costs: $600.
To keep a 40% margin, the price is $600 ÷ 0.60 = $1,000. That leaves $400 to pay overhead (office, ads, software, your own pay) and profit. The markup on cost is $400 ÷ $600 = 66.7%, the same number the chart shows for a 40% margin.
Now say the owner just “adds 40%” to the same $600. The price is $840 and $240 is left. That is a 28.6% margin, and the job brings in $160 less than planned. Do that on every job and the gap comes out of overhead and your pay.
Three mistakes that cost owners money
- Treating markup as margin. Accounting reports show margin. If you price with a 40% markup and expect to see 40% on the report, you will see about 29% and wonder where the money went.
- Marking up materials but not labor. Some owners add a markup to parts and supplies and charge crew time at cost. Margin has to come from the whole job, crew time included.
- Discounting off the top. Illustrative numbers: a $100 price on $70 of job costs keeps $30. Take 10% off and the price is $90, so you keep $20. A 10% discount cut the money left for overhead and profit by a third.
A one-page version to print
This shorter chart fits on one printed page. Keep it by the desk where you write quotes. The last column is the fastest way to price: multiply your job costs by that number to get the price that keeps the margin on the left.
| Margin | Markup on cost | Multiply job costs by |
|---|---|---|
| 5% | 5.3% | 1.05 |
| 10% | 11.1% | 1.11 |
| 15% | 17.6% | 1.18 |
| 20% | 25% | 1.25 |
| 25% | 33.3% | 1.33 |
| 30% | 42.9% | 1.43 |
| 35% | 53.8% | 1.54 |
| 40% | 66.7% | 1.67 |
| 45% | 81.8% | 1.82 |
| 50% | 100% | 2.00 |
| 55% | 122.2% | 2.22 |
| 60% | 150% | 2.50 |
| 65% | 185.7% | 2.86 |
| 70% | 233.3% | 3.33 |
| 75% | 300% | 4.00 |
| 80% | 400% | 5.00 |
To print just this part, highlight the table, then choose Print and “Selection” in your browser. Multipliers are rounded to two decimal places.
Price calculator
Job costs means crew time (with drive time), materials, vehicle and fuel. This is a simple calculator, not a quote.
How to use this
- Work out your true job costs. The pricing guide shows how.
- Decide the margin you need to cover overhead and leave profit. See what a good profit margin is for a service business, and add up your overhead with the overhead calculator.
- Use the calculator, the chart above, or divide your costs by one minus the margin. For full jobs with crew, hours and drive time, use the job price calculator.
- Check the result against the market. If it is too high to win jobs, change the job (scope, crew size, speed) before you cut the margin.
- After the job, compare real hours and costs with your estimate. Job costing for service companies shows how.
Questions owners ask
What is the difference between margin and markup?
Margin is the share of the selling price you keep: (price minus cost) divided by price. Markup is the amount added to cost: (price minus cost) divided by cost. A 100% markup is a 50% margin.
How do I turn a markup into a margin?
Divide the markup by one plus the markup. A 30% markup is 0.30 divided by 1.30, which is a 23% margin.
How do I turn a margin into a markup?
Divide the margin by one minus the margin. A 50% margin is 0.50 divided by 0.50, which is a 100% markup.
Which should I use when pricing jobs?
Use margin. It tells you how much of every dollar you take in is left to pay overhead and profit, and it is the number accounting reports use.
What markup do I need for a 30% margin?
A 42.9% markup. Divide 0.30 by 0.70 to get 0.429. On a job that costs $100, that is a price of $142.86.
Is a 50% markup the same as a 50% margin?
No. A 50% markup is a 33.3% margin. To keep a 50% margin, you need a 100% markup, which means charging double your job costs.