LoadingLoadingLoadingLoadingMarkup is measured against what the job cost you. Margin is measured against what the customer pays. They are never the same number, and quoting on one while reporting on the other is a quiet way for a busy year to turn into a thin one. This page explains the difference — the calculator below converts between them, and works back from a price you cannot change to what you can afford to spend.
Free to use · Runs entirely in your browser · No signup required
The first two set a price from a cost you know. The third works the other way — the price is fixed and you need to know what you can afford to spend.
What the job costs you. If you are VAT registered, exclude the VAT you can reclaim — it comes back, so counting it would overstate the cost. If you are not registered, or the VAT is not recoverable, it is money you do not get back: include it.
The percentage added on top of your cost.
Work from cost when the price is yours to set — you know what the job takes and you are deciding what to charge. Work from the price when it is not: a customer has a budget, you are on a schedule of rates, or you are matching a number someone else quoted. That last case is where jobs are lost, because the temptation is to accept the price and find out afterwards what was left. Working out the spend first tells you whether the job is worth having before you commit to it.
Selling price
£130.00
Profit
£30.00
Margin
23.08%
Profit as a percentage of the price the customer pays.
Markup
30%
Profit as a percentage of what it cost you.
Gross margin only. Prices exclude VAT; costs should exclude VAT you can reclaim and include VAT you cannot. It does not account for overhead allocation, finance costs, commission or tax.
Cushty builds quotes from your saved line items, then shows what each finished job actually earned once the costs are in.
See how quoting worksMarkup is measured against your cost. Margin is measured against the customer's price. Adding a 30% markup does not give you a 30% margin — it gives you 23.1%. Every percentage you add widens the gap, which is why the mistake gets more expensive the better your pricing gets.
Price = cost × (1 + markup) Price = cost ÷ (1 − margin) Margin = markup ÷ (1 + markup) Cost = price × (1 − margin)
The third line is the conversion most people actually need: it turns any markup straight into the margin it really produces, with no prices involved. The fourth is the one that gets used under pressure — the price is already fixed, and the question is what is left to spend on the job.
The classic mistake, with the figures the calculator opens with.
The gap is 6.9 points of margin. On £200,000 of turnover priced that way, that's roughly £13,800 of profit you thought you had made and didn't.
This page exists to explain the difference. If you already have a price and a cost in front of you, the profit margin calculator is the faster route.
Most quoting software lets you set a markup percentage on materials and labour. Most owners think in terms of margin — what's the profit on the job. The two are different ratios on different denominators, and the gap grows fast as the percentage goes up.
A 30% markup is a 23% margin. A 50% markup is a 33% margin. A 100% markup (doubling the cost) is a 50% margin. If you add a 25% markup thinking you've made 25% profit, you've actually made 20% — and on a busy year, that's the difference between a healthy business and a survivable one.
Calculators and generators we built for UK service businesses. All free, all in-browser, no signup.
Book a 30-minute walkthrough — we'll show you how Cushty fits your business. No commitment, no contract until you choose to subscribe.
UK-hosted · GDPR compliant · Month to month · Cancel any time
