What Margin Is a 12 Percent Markup?
Margin, against price
10.7%
Twelve percent added to a $10,000 cost is an $11,200 price, and $1,200 out of $11,200 is 10.7 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 number12 % or $
Price to charge$11,200.00
| Your cost | $10,000.00 |
|---|---|
| Price | $11,200.00 |
| Gross profit | $1,200.00 |
| Markup, against cost | 12% |
| Margin, against price | 10.7%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
Twelve percent markup is a 10.7 percent margin, and the number people most often get wrong on a job priced this thin is not the markup at all. It is the sales tax.
Tax you collect is not your money. It passes through you to the state, so it never belongs inside the cost you mark up and it never belongs inside the revenue you measure a margin against. Marking up a material cost that already has tax in it means you are charging a profit percentage on money you have to hand over, which inflates the price for no gain and makes every margin figure you look at afterwards wrong.
What is taxable is a state question and it is not uniform. Some states tax materials to the contractor and treat the contractor as the end consumer, some tax the improvement to the customer, and some tax labor on repair work but not on new construction. The rule to follow is your own state's, and the habit to build is keeping tax out of the cost column entirely so the percentages mean what they say.
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
What margin is a 12 percent markup?
10.7 percent. On a $10,000 cost that is an $11,200 price and $1,200 of gross profit.
Should sales tax be inside the cost I mark up?
No. Tax you collect belongs to the state, so marking it up charges the customer a profit percentage on money you have to hand over and makes your margin figures wrong.
Is contractor labor taxable?
It depends on the state and often on the type of work. Several states tax repair labor but not new construction, and several treat the contractor rather than the customer as the taxable consumer of materials.
The markup vs margin calculator takes any dimensions you like and hands back the same list.