What Margin Is an 18 Percent Markup?
Margin, against price
15.3%
Eighteen percent added to a $10,000 cost is an $11,800 price, and $1,800 out of $11,800 is 15.3 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 number18 % or $
Price to charge$11,800.00
| Your cost | $10,000.00 |
|---|---|
| Price | $11,800.00 |
| Gross profit | $1,800.00 |
| Markup, against cost | 18% |
| Margin, against price | 15.3%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
Eighteen percent is a 15.3 percent margin, and it is rarely a number anybody chose. It is usually a number that fell out: the customer had a figure in mind, the estimate was close to it, and the markup became whatever was left in between.
Working backwards from a price is a perfectly good check and a bad method. As a check it tells you what percentage a target price actually leaves, which is worth knowing before you agree to it. As a method it puts all the pressure on the cost estimate, and cost estimates under pressure do not get more accurate, they get more optimistic.
When a budget will not stretch, the honest lever is scope. Fewer fixtures, a smaller area, a longer schedule, a different material, the customer supplying something themselves. Every one of those is a real reduction in cost with a real reduction in what is delivered. Shaving the markup instead delivers the same job for less money and calls it a negotiation.
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 an 18 percent markup?
15.3 percent. On a $10,000 cost that is an $11,800 price and $1,800 of gross profit.
Is it wrong to work backwards from the customer's budget?
As a check it is useful, because it shows what a target price actually leaves. As a method it is dangerous, because the pressure lands on the cost estimate and cost estimates under pressure become optimistic.
What should I cut when the budget is short?
Scope, not markup. Fewer fixtures, a smaller area, a different material or a longer schedule are real reductions in cost. Cutting the markup delivers the same job for less money.
The markup vs margin calculator takes any dimensions you like and hands back the same list.