The two formulas
Markup is a percentage added on top of cost:
price = cost × (1 + markup%)
Margin is the percentage of the final price that is profit:
price = cost ÷ (1 − margin%)
Same $100 of cost, same "30%": a 30% markup gives a $130 price. A 30% margin gives a $142.86 price. That $12.86 gap is pure profit you either capture or donate — on every job, forever.
Why margin is the number that matters
Every financial statement, banker, and business benchmark speaks in margin — profit as a share of revenue. When you read that healthy job shops run "10–15% net margins," that's margin. If your quoting uses markup while your goals use margin, you're steering with a miscalibrated compass: a shop applying a 30% markup and believing it earns 30% margins actually earns 23% gross — before the overhead surprises.
Conversion table
| Markup you apply | Margin you actually get | Markup needed for that margin |
|---|---|---|
| 10% | 9.1% | 11.1% |
| 20% | 16.7% | 25% |
| 30% | 23.1% | 42.9% |
| 40% | 28.6% | 66.7% |
| 50% | 33.3% | 100% |
Read the middle column: to genuinely earn a 30% margin you need a 42.9% markup. Most shops that "add 30%" have never seen that number.
The fix takes one line
Decide your target margin, then price every job as cost ÷ (1 − margin). That's it. Every tool on this site does it that way — margin applied to price, never markup mislabeled as margin.
Quote with margin done right
The free calculator applies real margin to a full job cost — setup, cycle time, material with scrap, tooling. The $29 workbook adds multi-op jobs, your burdened shop rate, and a customer-ready quote sheet.
Free Quote Calculator Full Workbook — $29