What Margin Is a 10 Percent Markup?
Margin, against price
9.1%
Ten percent added to a $10,000 cost is an $11,000 price, and $1,000 out of $11,000 is 9.1 percent.
How that number is worked out
These are the figures this page was built with and every line the calculator produces from them. Change anything above and all of it moves.
- Your cost for the job10000 $
- I want to setMarkup percent
- That number10 % or $
Price to charge$11,000.00
| Your cost | $10,000.00 |
|---|---|
| Price | $11,000.00 |
| Gross profit | $1,000.00 |
| Markup, against cost | 10% |
| Margin, against price | 9.1%this is the one your accountant means |
| If you want this margin | Mark up cost by | On $10,000 cost, charge |
|---|---|---|
| 10% | 11.1% | $11,111.11 |
| 15% | 17.6% | $11,764.71 |
| 20% | 25% | $12,500.00 |
| 25% | 33.3% | $13,333.33 |
| 30% | 42.9% | $14,285.71 |
| 35% | 53.8% | $15,384.62 |
| 40% | 66.7% | $16,666.67 |
| 50% | 100% | $20,000.00 |
Markup compared
The gap between markup and margin widens as the number grows. Same cost, five markups.
| Markup | Price to charge | Margin, against price |
|---|---|---|
| 10% markup | $11,000.00 | 9.1% |
| 20% markup | $12,000.00 | 16.7% |
| 30% markup | $13,000.00 | 23.1% |
| 40% markup | $14,000.00 | 28.6% |
| 50% markup | $15,000.00 | 33.3% |
What else matters here
Markup is measured against your cost. Margin is measured against your price. Since the price is always the larger of the two, the margin is always the smaller percentage, and a ten percent markup comes out at a 9.1 percent margin.
Ten percent is below what most home service businesses need to survive. It has to cover overhead, which is rent, insurance, the truck, the phone and the person answering it, before a dollar of it is profit. A business running at a 9.1 percent gross margin is usually losing money once overhead is real.
If ten percent is what the market will bear on a particular job, the answer is not to accept a loss quietly. It is either to reduce the cost side, to change the scope, or to decline. There is an overhead and profit calculator on this site that will show what percentage your own business actually needs.
What this calculator assumes
- Markup is measured against your cost. Margin is measured against the price. They are never the same number and confusing them is the most expensive arithmetic mistake in the trades.
- A 50 percent markup is a 33.3 percent margin. To actually keep 50 percent of the price you have to mark up by 100 percent.
Questions people ask
Is 10 percent markup the same as 10 percent margin?
No. A 10 percent markup is a 9.1 percent margin, because markup is measured against cost and margin against the selling price.
What price is a 10 percent markup on $10,000?
$11,000, giving $1,000 of gross profit, which is 9.1 percent of the price.
Is a 10 percent markup enough?
Rarely. Gross margin has to cover all overhead before any of it becomes profit, and 9.1 percent usually will not.
The markup vs margin calculator takes any dimensions you like and hands back the same list.