Charge a "50% markup" and you might think you are keeping half. You are keeping a third. Markup measures profit against your cost; margin measures it against the price, and the gap between them is where a lot of trade businesses lose money without ever seeing it. Enter a cost below, pick markup or a target margin, and see both numbers at once.
Markup = profit ÷ cost. Margin = profit ÷ price. Same dollars of profit, two different bases. Estimates only; not financial advice.
Here is the exact trap. You decide you want to make 40 percent on materials. You go into your pricing and add 40 percent to every cost. It feels right. But adding 40 percent to cost is a 40 percent markup, and a 40 percent markup is only a 28.6 percent margin. You meant to keep 40 cents of every dollar and you are actually keeping 29. Across a year of materials, that difference is often several thousand dollars of profit you intended to earn and never did.
Both columns below describe the same profit. The markup is measured against your cost; the margin against the price you charge. Notice how far apart they drift as the numbers climb.
| Markup | Margin |
|---|---|
| 15% | 13.0% |
| 20% | 16.7% |
| 25% | 20.0% |
| 33% | 24.8% |
| 40% | 28.6% |
| 50% | 33.3% |
| 67% | 40.1% |
| 100% | 50.0% |
The rule to memorize: margin = markup ÷ (1 + markup). Or just use the calculator, switch it to "target margin," type the margin you actually want to keep, and it hands you the markup that gets you there.
Price from the number your bank account cares about, which is margin. Margin is the share of every invoiced dollar you keep, so it is the number that ties directly to whether the business is profitable. Markup is just the mechanical way you get there on a given part. The pros set a target margin for the business, then work out the markup each line needs to hit it. Doing it the other way around, picking a comfortable markup and hoping the margin lands, is how shops end up busy and broke.
Knowing the right markup is step one. Applying it on every line of every invoice, at 6pm in a driveway, is the part that slips. FieldForge stores your price book with the markup already baked in, so when you build an invoice by voice the parts price themselves correctly every time, no mental math, no "close enough." Pair this with the hourly rate calculator for labor and you have both halves of a job priced to actually make money.
Markup is profit as a percent of cost; margin is the same profit as a percent of the selling price. A $100 part sold for $150 is a 50 percent markup but a 33 percent margin.
Margin equals markup divided by one plus the markup. The calculator shows both at once so you do not have to.
Set a target margin for the business, then apply whatever markup each part needs to reach it. Margin is the number that determines whether you are profitable.