What Markup Gives an 8 Percent Margin?
Markup, against cost
8.7%
To keep 8 percent of the price, add 8.7 percent to a $10,000 cost: $10,869.57.
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 setMargin percent
- That number8 % or $
Price to charge$10,869.57
| Your cost | $10,000.00 |
|---|---|
| Price | $10,869.57 |
| Gross profit | $869.57 |
| Markup, against cost | 8.7% |
| Margin, against price | 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 |
Margin compared
Going the other way, the required markup climbs much faster than the margin does.
| Margin | Price to charge | Markup, against cost |
|---|---|---|
| 10% margin | $11,111.11 | 11.1% |
| 20% margin | $12,500.00 | 25% |
| 30% margin | $14,285.71 | 42.9% |
| 40% margin | $16,666.67 | 66.7% |
| 50% margin | $20,000.00 | 100% |
What else matters here
Eight percent margin takes an 8.7 percent markup, and this page exists to show the most underrated lever in a small contracting business: a very small change in price.
Raise this price by two percent, from $10,869.57 to $11,086.96. The cost has not moved, so the entire increase is gross profit, which goes from $869.57 to $1,086.96. A two percent price rise produced a twenty five percent rise in gross profit, and almost no customer notices two percent.
Cutting cost by two percent is worth having as well and is worth less: it raises gross profit by about twenty three percent and it is far harder to do, because it means renegotiating with suppliers or working faster. Price is the lever nearest to hand, it works immediately, and the reason most contractors never pull it is not the market, it is that nobody enjoys quoting a higher number.
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 markup gives an 8 percent margin?
8.7 percent. On a $10,000 cost that is a price of $10,869.57 and $869.57 of gross profit.
What does a 2 percent price increase do at an 8 percent margin?
It raises gross profit by 25 percent, from $869.57 to $1,086.96, because the cost does not move and the whole increase falls to the bottom line.
Is it better to raise price or cut cost?
Raising price, usually. A two percent price rise lifts gross profit by about 25 percent here, a two percent cost cut by about 23 percent, and the cost cut is far harder to achieve.
The markup vs margin calculator takes any dimensions you like and hands back the same list.