Cost £600.00, sold at £1,000.00, keeps £400.00 profit: a 40.00% margin on the price, which is a 66.67% markup on the cost.
Markup and margin describe the same pound of profit from two different directions, and mixing them up is one of the most expensive habits in pricing. Markup measures profit against what the work cost you. Margin measures the same profit against what the client paid. Because the price is always the bigger number, the margin percentage is always smaller than the markup percentage on the same job.
The mistake usually happens in one direction: a firm wants to "make 40%" and adds 40% to cost. A £600 cost plus 40% gives a £840 price, but the profit of £240 is only 28.57% of that price. The firm believes it is earning a 40% margin while actually earning a 28.57% one, and the missing eleven points come straight out of profit on every job priced that way. To genuinely earn a 40% margin on a £600 cost, the price needs to be £1,000: cost divided by 0.6, not cost times 1.4.
The calculator above keeps both numbers in view at once, whichever one you start from, so a quote is never priced on the wrong base again.
The workings below update as you change the inputs above.
The same job described both ways. Use these tables to translate between the markup you apply and the margin you actually earn.
| Markup on cost | Margin on price | £600 cost becomes | Profit |
|---|---|---|---|
| 10% | 9.09% | £660.00 | £60.00 |
| 15% | 13.04% | £690.00 | £90.00 |
| 20% | 16.67% | £720.00 | £120.00 |
| 25% | 20.00% | £750.00 | £150.00 |
| 30% | 23.08% | £780.00 | £180.00 |
| 40% | 28.57% | £840.00 | £240.00 |
| 50% | 33.33% | £900.00 | £300.00 |
| 66.67% | 40.00% | £1,000.00 | £400.00 |
| 100% | 50.00% | £1,200.00 | £600.00 |
| Target margin | Markup needed | £1,000 cost becomes | Profit |
|---|---|---|---|
| 10% | 11.11% | £1,111.11 | £111.11 |
| 15% | 17.65% | £1,176.47 | £176.47 |
| 20% | 25.00% | £1,250.00 | £250.00 |
| 25% | 33.33% | £1,333.33 | £333.33 |
| 30% | 42.86% | £1,428.57 | £428.57 |
| 35% | 53.85% | £1,538.46 | £538.46 |
| 40% | 66.67% | £1,666.67 | £666.67 |
| 50% | 100.00% | £2,000.00 | £1,000.00 |
For a firm selling products, cost is mostly known before the sale. For a firm selling project work, it is the other way round: the price is agreed up front and the cost arrives afterwards, hour by hour, as the team delivers. A quote priced at a healthy 40% margin quietly becomes a 25% job when the work takes sixty hours instead of the forty that were estimated, and nobody notices until the accounts are done.
That is why the margin conversation in professional services is really a time-recording conversation. The margin you calculate is only as reliable as the cost figure underneath it, and the cost of a project is the hours spent on it multiplied by what those hours cost you. Firms that record time as it happens know the true cost of every job while it is still running, and can act while the margin can still be saved. Firms that reconstruct timesheets at month end find out what a job really cost long after the price was banked.
If the margin you worked out above depends on an hours estimate, the hours worked calculator will give you the time figure, and the charge-out rate and margin calculator translates cost per hour and target margin into the hourly rate to bill.
A calculator tells you the margin on the numbers you type in. Quantim tells you the margin on the numbers that actually happened, because it records the time and expense cost flowing into each job alongside the fees charged for it.
Every timesheet hour and expense lands against its job at the person's cost rate, so the true cost of a project builds up live while the work is delivered, not in a spreadsheet afterwards.
Fees are managed against each job and work in progress shows the value recorded but not yet invoiced, so you can see cost and fee side by side before the margin is gone.
Job profitability reports compare cost against fee project by project, which is how firms find the quiet loss-makers that an overall average margin hides.
Markup and margin both describe the same profit, measured against different bases. Markup is profit as a percentage of cost; margin is profit as a percentage of selling price. Buy a job in at 600 pounds and sell it at 1,000 pounds and the 400 pounds profit is a 66.67% markup on the cost but a 40% margin on the price. Markup is always the larger number for the same job because cost is the smaller base.
Subtract cost from selling price to get profit, divide the profit by the selling price, then multiply by 100. A job sold at 1,000 pounds that cost 600 pounds to deliver makes 400 pounds profit, and 400 divided by 1,000 times 100 is a 40% profit margin.
Divide profit by cost and multiply by 100. If a job cost 600 pounds to deliver and sells for 1,000 pounds, the 400 pounds profit divided by the 600 pounds cost gives a markup of 66.67%. To go the other way, multiply cost by one plus the markup as a decimal: 600 pounds at a 66.67% markup is 600 times 1.6667, which is 1,000 pounds.
Divide the markup by 100 plus the markup, then multiply by 100. A 50% markup is 50 divided by 150 times 100, which is a 33.33% margin. Converting the other way, markup equals margin divided by 100 minus the margin, times 100, so a 40% margin needs a 66.67% markup.
Divide the cost by one minus the target margin as a decimal. To make a 40% margin on a job that costs 600 pounds, divide 600 by 0.6 to get a selling price of 1,000 pounds. Do not add the margin percentage to the cost: 600 pounds plus 40% is only 840 pounds, and at that price the margin is just 28.57%.
There is no single right answer because overheads, risk and market position differ, but many professional services firms target a margin of 30 to 50% on charged work. What matters most is knowing your actual margin per job, because an average hides the loss-making projects inside it. Reviewing margin job by job is usually where the improvement comes from.
Because the same profit is divided by a bigger number. Markup divides profit by cost, margin divides it by selling price, and the selling price is always higher than cost whenever there is any profit at all. The gap grows as prices rise: a 25% markup is a 20% margin, but a 100% markup is only a 50% margin.
Quantim records the time and expense cost that goes into each job as it happens, alongside the fees you charge for it, so the margin on every project is visible while the work is still running. Work in progress tracking shows the value recorded but not yet invoiced, and profitability reports compare cost against fee job by job, which is how firms find the quiet loss-makers an overall average hides.
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