What Margin Is a 40 Percent Markup?
Margin, against price
28.6%
Forty percent added to a $10,000 cost is a $14,000 price, and $4,000 out of $14,000 is 28.6 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 number40 % or $
Price to charge$14,000.00
| Your cost | $10,000.00 |
|---|---|
| Price | $14,000.00 |
| Gross profit | $4,000.00 |
| Markup, against cost | 40% |
| Margin, against price | 28.6%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
Forty up is 28.6 down, a gap of over eleven points. Anyone assuming markup and margin are roughly the same thing is now wrong by a margin larger than most contractors' entire net profit.
Forty percent markup is normal on materials in trades where the contractor carries the warranty, the returns and the stocking risk. It looks high to a client reading a line item and it is not, because the client is not paying for the item, they are paying for it being there, correct, and guaranteed.
Whether to show that markup as a line or bury it in a lump sum price is a business decision, not an ethical one, as long as the contract is honest about which one you are doing. Cost plus contracts require it to be visible; fixed price contracts do not.
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 40 percent markup?
28.6 percent. On a $10,000 cost, a $14,000 price and $4,000 of gross profit.
Is 40 percent markup on materials normal?
In trades where the contractor carries warranty, returns and stocking risk, yes. The client is paying for the material being there, correct and guaranteed, not just for the item.
Do I have to show markup on an invoice?
On a cost plus contract, usually yes, since that is what the contract promises. On a fixed price contract the price is the price and the breakdown is yours.
The markup vs margin calculator takes any dimensions you like and hands back the same list.