Insights · Profit ·
Markup vs margin: pricing jobs properly
Many trade businesses think they make 30% on a job because they add 30%. They don’t. A 30% markup is a 23% margin.
The difference
- Markup = (price − cost) ÷ cost.
- Margin = (price − cost) ÷ price.
Quick conversions
- 20% markup = 16.7% margin
- 25% markup = 20% margin
- 30% markup = 23.1% margin
- 50% markup = 33.3% margin
- 100% markup = 50% margin
Price for the real costs
- Overheads: vehicles, insurance, software, office, your own salary.
- Non-productive time: quoting, travel, call-backs, defects.
- On-costs: super (12%), workers’ compensation and, once over $1.3 million in wages, Queensland payroll tax.
- Finance costs if clients pay slowly.
Then check it actually happens
Compare quoted vs actual margin by job. That’s job costing.
Quick answers
Is a 30% markup a 30% margin?
No. A 30% markup is about a 23% margin.
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General information only. This doesn’t take your circumstances into account and isn’t tax, financial or legal advice. Talk to your accountant or registered tax agent before acting. PRM is not a registered tax agent; tax agent services are provided by Australian Tax & Super Pty Ltd (TPB 25291395).