Markup vs margin — the mistake that costs tradies money
This trips up almost everyone. Markup is the % you add on top of your cost. Margin is the % of the final price that's profit. They are not the same number, and assuming they are quietly eats your profit.
Example: a job costs you $1,000 and you "add 30%". That's a 30% markup → price $1,300, profit $300. But your margin is only $300 ÷ $1,300 = 23%. If you actually wanted a 30% margin, you'd need to charge $1,429. That gap — $129 on one small job — is real money you'd be leaving on the table all year.
The formulas
- Price from margin: price = cost ÷ (1 − margin%) → $1,000 ÷ (1 − 0.30) = $1,429
- Price from markup: price = cost × (1 + markup%) → $1,000 × 1.30 = $1,300
- Margin from markup: margin = markup ÷ (1 + markup)
Markup vs margin quick reference
| If your markup is… | Your margin is… |
|---|---|
| 20% | 16.7% |
| 30% | 23.1% |
| 50% | 33.3% |
| 100% | 50% |
How to use this in a real quote
Add up everything the job will truly cost you — materials, your labour at your charge-out rate, any subbies, tip fees, consumables. Pick the margin you want. The price it gives you is your quote ex-GST; add 10% GST if you're registered. Don't forget to set aside money for tax on the profit (see the tax set-aside calculator).
FAQ
What markup should a tradie add?
There's no single right number, but many tradies aim for a 30–50% margin on a job (which is a 43–100% markup). Materials are often marked up 10–30% on their own. Use the calculator with your real costs rather than a rule of thumb.
Is a 30% markup the same as a 30% margin?
No. A 30% markup gives you about a 23% margin. To get a 30% margin you need a ~43% markup. This is the single most common pricing mistake tradies make.
Should I show the markup on my quote to the customer?
No — customers see one price (or itemised line totals). Your markup/margin is your internal number for making sure the job is worth doing.
More free tools for tradies
General information for Australian businesses, not financial advice.