Profit margin calculator
Go from cost and the margin you want to a price, or from cost and price to your margin. Margin and markup, side by side.
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Margin and markup, plainly
Profit as a share of the price. What you keep from every sale.
Profit as a share of the cost. How much you add on top of what it costs you.
Markup is always the bigger number, which is why pricing by markup can leave you short.
The maths
price = cost ÷ (1 − margin %)margin = (price − cost) ÷ pricemarkup = (price − cost) ÷ cost
| Margin | Same as a markup of | Multiply cost by |
|---|---|---|
| 10% | 11.1% | 1.111 |
| 20% | 25% | 1.25 |
| 25% | 33.3% | 1.333 |
| 30% | 42.9% | 1.429 |
| 40% | 66.7% | 1.667 |
| 50% | 100% | 2 |
| 60% | 150% | 2.5 |
Questions
What is the difference between margin and markup?
Both compare profit to something else. Margin is profit as a share of the price. Markup is profit as a share of the cost. A service that costs 60 and sells for 100 has a 40% margin and a 66.7% markup.
Why can a margin never reach 100%?
Margin is profit divided by price. Unless something costs you nothing, the profit is always less than the price, so the margin stays under 100%. Markup has no ceiling.
What should I count as the cost of a service?
What it costs you to deliver that one job: materials, your time or a team member's time at their hourly cost, travel, and any fees. Rent and software are usually covered by your overall margin rather than added to each job.
I added 30% to my costs. Why is my margin not 30%?
Adding 30% to the cost is a 30% markup. As a share of the price, that profit is only 23.1%. To get a 30% margin, divide the cost by 0.7 instead.
Quote, invoice and get paid from one place.
In startbuddi, your quotes, invoices and client records sit together, so you can see who has paid and who needs a nudge.
