Markup and margin calculator

Enter what a job or item costs you and either the markup you want to add or the margin you want to keep. The calculator gives the selling price, your profit, and both percentages, with an optional price including 20% VAT.

How do I use the markup calculator?

1. Enter your cost. Use your full cost for the item or job: materials (before VAT if you are VAT registered), plus labour cost if you are pricing a whole job.
2. Choose markup or margin. Enter a markup % if you think "cost plus". Enter a target margin % if you think "I want to keep X% of every pound I charge".
3. Read the results. You get the selling price, the profit in pounds, the margin % and the markup %.
4. Add VAT if needed. Tick "add 20% VAT" to see the price your customer pays, if you are VAT registered.

What is the formula for markup and margin?

As Sage puts it, "markup uses the cost price as the base and margin uses the selling price as the base". Same profit, different base, different percentage. Here is how common markups translate:

For a fuller explanation with more examples, read our markup vs margin guide.

Worked markup examples for trades

1. A bathroom job priced with markup

A plumber's costs for a bathroom refit are £800 (materials ex VAT plus labour at cost). They add a 25% markup.

• Selling price: £800 × 1.25 = £1,000
• Profit: £200
• Margin: £200 ÷ £1,000 = 20%
• Price with 20% VAT: £1,200

2. Pricing to a target margin

A builder wants to keep 30% of the selling price on a £1,400 job cost.

• Selling price: £1,400 ÷ 0.7 = £2,000
• Profit: £600
• Markup: £600 ÷ £1,400 = 42.9%

Had the builder added a 30% markup instead, the price would be £1,820 and the profit £420, so £180 less on one job.

3. Materials markup on a small job

An electrician buys £350 of fittings (ex VAT) for a kitchen and adds a 15% markup.

• Selling price for materials: £350 × 1.15 = £402.50
• Profit on materials: £52.50
• Margin: £52.50 ÷ £402.50 = 13.0%

4. A zero-rated installation

HMRC zero-rates the installation of qualifying energy-saving materials in homes until 31 March 2027. If an installer's cost is £4,500 and they add a 20% markup, the price is £5,400, with no VAT on top while the zero rate lasts. Tick "add 20% VAT" only for standard-rated work.

What mistakes do trades make with markup?

• Thinking a 30% markup is a 30% margin. It is only 23.1%. If your overheads need 30% of every pound, you are short.
• Leaving out labour. Marking up materials only and charging labour at cost means your time earns nothing extra towards overheads such as the van, insurance and tools.
• Marking up the VAT. If you are VAT registered, reclaim the VAT on materials and mark up the net cost. Marking up the gross cost and then adding VAT again overcharges and can lose you jobs.
• Not VAT registered but using net costs. If you cannot reclaim VAT, the VAT you pay on materials is a real cost. Use the VAT-inclusive figure as your cost.
• Forgetting the discount. A 10% discount on a job with a 20% margin halves your profit. Check the margin after any discount.

How much margin do you need?

Your margin has to cover the costs that are not on any single job: van, fuel, insurance, phone, software, accountant and the time you spend quoting. A quick way to set a floor is to divide your yearly overheads by your expected yearly sales. If overheads are £15,000 and you expect £100,000 of sales, 15% of every pound goes on overheads before you earn any profit, so a 20% margin leaves only 5% profit. Our day rate calculator helps you work out the labour side of the same sum.

Build markup into every quote

Once you know your numbers, apply them the same way on every job. Our guide on how to write a quote shows where materials, labour and VAT should sit. Most quote and invoice software for trades lets you set a default markup on materials and labour, so the sums are done for you on every quote.