Free tool
Markup vs margin
they are not the same number.
Adding 20% to your cost does not give you a 20% margin. Convert between the two here, and see what you should actually charge to hit the return you want.
Start from a markup
What you get when you add a percentage on top of cost.
$
%
Selling price$1,200
Gross profit$200
Actual margin16.7%
Start from a target margin
What you must charge to keep a given percentage of the sale.
$
%
Markup required25.0%
Gross profit$250
Charge this$1,250
How this works
The difference that quietly costs you a truck
- Markup is measured against your cost. Margin is measured against the price the customer pays. The same job produces two different percentages.
- A 20% markup on $1,000 sells at $1,200 and returns a 16.7% margin. To actually keep 20% of the sale you must charge $1,250 — a 25% markup.
- The gap widens as the percentage rises: a 50% markup is only a 33.3% margin. Pricing by markup while reporting by margin is why some busy years end flatter than expected.
- Pick one language for the whole business. Most owners find margin easier because it matches how accountants and lenders read the accounts.
Set the margin once, apply it everywhere.
SimpliPilot builds your target margin into the price book so every estimate lands where it should.
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