What Margin Is a 20 Percent Markup?
Margin, against price
16.7%
Twenty percent added to a $10,000 cost is a $12,000 price, and $2,000 out of $12,000 is 16.7 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 number20 % or $
Price to charge$12,000.00
| Your cost | $10,000.00 |
|---|---|
| Price | $12,000.00 |
| Gross profit | $2,000.00 |
| Markup, against cost | 20% |
| Margin, against price | 16.7%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
Twenty percent markup is the most commonly quoted figure in residential contracting and the most commonly misunderstood one. People add twenty percent expecting a twenty percent margin and get 16.7, which is a sixteen percent shortfall against what they thought they were earning.
Over a year on $400,000 of cost, that gap is real money: $80,000 of gross profit rather than the $100,000 you would need to make a true twenty percent margin. The fix is arithmetic, not effort.
If you want an actual twenty percent margin, the markup you need is twenty five percent. That conversion is on this site as its own page, and it is worth committing to memory: twenty five up gives twenty down.
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 20 percent markup the same as 20 percent margin?
No. A 20 percent markup is a 16.7 percent margin. To get a true 20 percent margin you need a 25 percent markup.
What price is a 20 percent markup on $10,000?
$12,000, with $2,000 of gross profit, which is 16.7 percent of the price.
Why do markup and margin differ?
Markup divides profit by cost. Margin divides the same profit by the selling price. The price is always bigger, so the margin percentage is always smaller.
The markup vs margin calculator takes any dimensions you like and hands back the same list.