How the formula works
Price = cost × (1 + markup%). Profit = price − cost. Profit margin = profit ÷ price. The calculator shows why a familiar markup percent is not the same as the margin you keep.
Worked example
Cost $1,000 with 40% markup → price $1,400, profit $400, margin ≈ 28.6%. If you told yourself you “kept 40%,” you overstated margin by confusing it with markup — a common invoice mistake.
FAQ
What is the difference between markup and margin?
Markup is profit as a percent of cost. Margin is profit as a percent of price. A 40% markup is not a 40% margin.
Which number should I quote to clients?
Quote the invoice price. Use markup internally to build that price from cost; check margin so you know what is left after the sale.
Does this replace an hourly rate?
No. Use it when you have a cost basis — contractors, licenses, goods — and need a sell price. For labor-led work, start with the rate calculator.
What markup is “normal”?
It varies by industry and risk. Agencies often land well above commodity resale markups. Pick a number that funds support time, not only unit cost.
Building a full project number? Use the project quote calculator.