Free tool
Markup Calculator: Price a Job From Your Cost
Enter what a job costs you and either a markup or the profit margin you want. You get the price to charge, your profit in dollars, and the markup and margin as percents. Fasite is all-in-one, operations-first software for home service businesses.
Published by Fasite. Questions: support@fasite.org.
The boxes open on the worked example further down. Click a box and type your own numbers.
Materials plus labor, plus anything else the job costs you.
Not sure what an hour of labor costs? Work out your labor cost first.
0 or more. 100 doubles your cost.
Price to charge
$1,281.00
- Profit: $366.00
- Markup: 40%
- Margin: 28.6%
- Cost: $915.00
How this was worked out
- Price = cost × (1 + markup) = $915.00 × (1 + 0.4) = $1,281.00
- Profit = price minus cost = $1,281.00 minus $915.00 = $366.00
- Markup = profit ÷ cost = $366.00 ÷ $915.00 = 40%
- Margin = profit ÷ price = $366.00 ÷ $1,281.00 = 28.6%
Markup divides profit by your cost. Margin divides it by your price, so for the same job the margin is never larger than the markup.
Markup vs margin
Both are profit as a percent. They divide the profit by different things, and mixing them up is how a job ends up under-priced.
- Markup = profit ÷ cost. It is the percent you add on top of what the job costs you.
- Margin = profit ÷ price. It is the share of what the customer pays that you keep.
A job costs $80 and sells for $100. The profit is $20. The markup is $20 ÷ $80, which is 25%. The margin is $20 ÷ $100, which is 20%. Same job, same profit, two different percents. For the same job the margin is never larger than the markup. A margin can never reach 100%, while a markup has no ceiling.
To go from one to the other: margin = markup ÷ (1 + markup), and markup = margin ÷ (1 minus margin).
Markup to margin table
Each row is worked out from the formulas above. The first table starts from the markup you add and shows the margin you keep. The second goes the other way: the margin you want to keep, and the markup it takes to get there.
| Markup | Margin you keep |
|---|---|
| 10% | 9.1% |
| 20% | 16.7% |
| 25% | 20% |
| 30% | 23.1% |
| 33.3% | 25% |
| 40% | 28.6% |
| 50% | 33.3% |
| 60% | 37.5% |
| 75% | 42.9% |
| 100% | 50% |
| Target margin | Markup you need |
|---|---|
| 10% | 11.1% |
| 15% | 17.6% |
| 20% | 25% |
| 25% | 33.3% |
| 30% | 42.9% |
| 35% | 53.8% |
| 40% | 66.7% |
| 50% | 100% |
Worked example: replacing a water heater
Hypothetical example, not industry data. Every number below is made up so you can check the arithmetic. The calculator above opens on this job.
- Materials: the water heater at $650 plus fittings and a permit at $85 is $735.
- Labor: 4 hours at a labor cost of $45 an hour is $180.
- Cost: $735 plus $180 is $915.
- With a 40% markup: price = $915 × 1.4 = $1,281. Profit = $1,281 minus $915 = $366. Margin = $366 ÷ $1,281 = 28.6%.
- Wanting a 40% margin instead: price = $915 ÷ (1 minus 0.4) = $915 ÷ 0.6 = $1,525. Profit = $610. Markup = $610 ÷ $915 = 66.7%.
Same 40%, two different prices: $1,281 against $1,525, a gap of $244 on one job. Adding 40% to the cost keeps 28.6% of the price. Keeping 40% of the price takes a 66.7% markup.
Not sure what an hour of labor really costs you? Work out your labor cost first with the labor rate calculator, then use that figure here.
Common markup mistakes
- Using a margin as if it were a markup. A 40% markup on this job keeps 28.6% of the price, not 40%.
- Pricing from the wage on the paycheck. Payroll taxes, insurance and the hours nobody pays for ride on top of it. The labor rate calculator works out a labor cost with those in.
- Treating the whole markup as profit. The markup also has to pay for overhead: insurance, the truck, software, the office and marketing. If your cost leaves overhead out, the profit shown here is before it.
- Guessing the cost. A price built on a guessed cost is a guessed price. Time a few real jobs and keep the receipts.
- Reusing last month's price. When a supplier raises a price or a job runs long, the cost moves. Run the numbers again before you send the estimate.
Next step
Pricing a cleaning or a lawn cut? The house cleaning price calculator and the lawn mowing price calculator add crew time, drive time and overhead. Pricing a paint job? The painting price calculator works out the gallons and labor hours first. See all the free tools.
When the price is right, put it in an estimate. Fasite Pro is $199 a month with 30 days free, and no card is needed to start.
Questions about markup.
Markup is profit divided by cost. To find a price from a markup, multiply your cost by 1 plus the markup: price = cost × (1 + markup). A job that costs 100 with a 25% markup sells for 100 × 1.25, which is 125.
Subtract the cost from the price to get the profit, then divide the profit by the cost. A job that costs 80 and sells for 100 has 20 of profit. 20 ÷ 80 is 0.25, so the markup is 25%.
Both are profit as a percent, but they divide by different things. Markup divides profit by your cost. Margin divides profit by your price. On a job that costs 80 and sells for 100, the profit is 20, the markup is 25% and the margin is 20%. For the same job the margin is never larger than the markup.
To turn a markup into a margin, divide the markup by 1 plus the markup. To turn a margin into a markup, divide the margin by 1 minus the margin. A 50% markup is 0.5 ÷ 1.5, a 33.3% margin. A 40% margin is 0.4 ÷ 0.6, a 66.7% markup. The tables on this page list the common ones.
There is no single right markup, and a number copied from another business may not fit yours. It has to cover your overhead and leave the profit you need. Start from your own costs and the margin you want to keep, then switch the calculator to target profit margin to see the markup that gives you. This page does not suggest one.
It should, if you pay for the labor. Split the cost into materials and labor, and the calculator adds the materials to the labor hours times what an hour of labor costs you. Use a labor cost that already has payroll taxes in it. The labor rate calculator works that out.
Win the work. Run the work.
We build your website the same day and show it to you during your 30-day free trial. No card needed to start.