Markup is profit as a percentage of cost, while margin is profit as a percentage of the selling price. Selling something that costs $100 for $125 is a 25% markup and a 20% margin. To hit a target margin, divide cost by one minus the margin, so a 20% margin on $100 of cost gives a $125 price.[1]
Markup and margin calculator
Enter your costs excluding GST. Choose whether your percentage is a markup on cost or a margin on the selling price.
Use up to two decimal places, without commas. Cost must be above $0 and at most $100 million; margin must be below 100%; markup can be up to 1,000%.
- Selling price excluding GST
- $125.00
- Price less entered costs
- $25.00
- Equivalent markup
- 25.00%
- Resulting margin
- 20.00%
The selling price is rounded to the nearest cent; ratios use that rounded price. Include labour, materials and any overheads you want to recover in your cost. This is not net profit and does not recommend a margin or calculate GST.
Two formulas, two different answers
Business.gov.au describes cost-plus pricing as totalling your costs and adding a mark-up or margin. The two are not the same number, so say which one you mean. All figures here are fictional and ex GST.
Markup % = (price minus cost) divided by cost, multiplied by 100. Margin % = (price minus cost) divided by price, multiplied by 100. For pricing formulas, enter the percentage as a decimal: price from a 30% markup = cost x 1.30; price for a 30% margin = cost divided by 0.70.
Sources[1]
Price from a target margin, on $100 of cost
Dividing by one minus the margin gives the price. The markup that produces the same price is higher than the margin.
| Target margin | Price | Profit | Same result as a markup of |
|---|---|---|---|
| 20% | $125.00 | $25.00 | 25.00% |
| 25% | $133.33 | $33.33 | 33.33% |
| 30% | $142.86 | $42.86 | 42.86% |
| 50% | $200.00 | $100.00 | 100.00% |
Sources[1]
Worked example: $2,000 of materials
A 30% markup gives a price of $2,000 x 1.30 = $2,600. Profit is $600, so the margin is $600 divided by $2,600 = 23.08%, not 30%.
A 30% margin gives a price of $2,000 divided by 0.70 = $2,857.14. Profit is $857.14, so the markup is $857.14 divided by $2,000 = 42.86%. The markups below show the other direction.
| Markup on cost | Price on $100 cost | Margin on price |
|---|---|---|
| 20% | $120.00 | 16.67% |
| 25% | $125.00 | 20.00% |
| 30% | $130.00 | 23.08% |
| 50% | $150.00 | 33.33% |
| 100% | $200.00 | 50.00% |
Sources[1]
Choosing one and using it consistently
Pick one method, write it down in your pricing notes and use it in every quote. Mixing them is how a business believes it earns a 30% margin while only earning 23%. Margin is easier to compare with a profit target, while markup is easier to apply to a supplier's cost. This guide recommends no percentage, because it depends on your overheads and goals. If your cost includes materials only, that margin is before labour, overheads and other job costs. It is not the trade business's net profit margin.
Business.gov.au says to review prices at least once a year, or whenever costs or market conditions change. It also says your price should cover your costs and reflect the full value of the work, even when you compare with competitors.
Sources[1]
Common questions
- Is 30% markup the same as 30% margin?
- No. A 30% markup on $100 of cost gives a $130 price and a 23.08% margin. A 30% margin on $100 of cost needs a price of $142.86, which is a 42.86% markup.[1]
- Is 25% markup 20% margin?
- Yes. Cost of $100 with a 25% markup sells for $125. Profit is $25, which is 25% of cost and 20% of the $125 selling price.[1]
Official sources
Checked 16 October 2026. Rules can change; use these sources to check the requirements for your job.
Related guides
- How do I calculate my trade business charge-out rate?
- How do I cost a trade job before quoting?
- Free quote template for Australian tradies
Job workflows for plumbers, electricians, HVAC businesses, builders.
Put it to work on the next job
Leadhand lets you keep materials and labour in a pricebook and build quotes from them. Decide your markup or margin method first, then check how each quote compares.
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