What Margin Is a 5 Percent Markup?
Margin, against price
4.8%
Five percent added to a $10,000 cost is a $10,500 price, and $500 out of $10,500 is 4.8 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 number5 % or $
Price to charge$10,500.00
| Your cost | $10,000.00 |
|---|---|
| Price | $10,500.00 |
| Gross profit | $500.00 |
| Markup, against cost | 5% |
| Margin, against price | 4.8%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
Five percent is the smallest number anybody applies on purpose, and it comes out as a 4.8 percent margin. Nobody prices a whole job at it. Where it shows up is on a pass through: an item the customer is effectively buying through you, handled at close to cost as a courtesy or because the contract requires it.
The trouble with a small percentage on a pass through is that the work of handling it does not scale with the invoice. Somebody has to order it, chase it, take delivery, store it, check it against the packing list, and own the warranty conversation if it is wrong. That is the same amount of work on a $400 item as on a $4,000 one, and five percent pays $20 for the first.
If the intention really is to pass a cost through at nearly zero, a flat handling charge does the job honestly: a fixed dollar amount per order or per delivery, stated in the contract, that covers the admin rather than pretending to. A percentage is the wrong shape for a cost that is fixed.
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 5 percent markup?
4.8 percent. On a $10,000 cost that is a $10,500 price and $500 of gross profit.
Is 5 percent markup ever appropriate?
Only on a pass through item handled as a courtesy or because the contract requires it. It does not cover the cost of ordering, receiving, storing and warranting the item.
What should I charge instead on a pass through?
A flat handling fee per order or per delivery, written into the contract. The admin cost of handling an item is fixed, so a percentage is the wrong shape for it.
The markup vs margin calculator takes any dimensions you like and hands back the same list.