Enter your cost and the profit margin you're aiming for. The tool shows the right selling price, where adding a percentage to cost misleads you and what a discount takes out of profit.
Result
Selling price for target margin
–
Price after discount
–
Price when the same percentage is added to cost–
Actual margin at this price–
Markup needed for the target margin–
Profit per unit before / after discount–
Extra sales needed to make up for the discount–
The calculation is done in your browser; your figures go nowhere unless you send them.
To prepare all your quotes in one fileA quote form that pulls prices from the product list, a margin check on every line and a log of won / lost quotes.
Send us your figures and the result; we'll review them and get back to you within one business day. Free and non-binding.
margin {m}If you add {h} to cost, the price is {e}, but your margin comes out at {g}, not {h}. For the margin you're aiming for, the price should be {f}; every sale is {k} short. With a {i} discount the margin drops by {s}. To keep the same total profit you need to sell {a} more. With a {i} discount the price falls below cost: at this discount every sale loses money.can't be made up
Extra sales needed to make up = profit per unit before discount ÷ profit per unit after discount − 1
Margin and the matching markup
Target margin
Markup on cost
%10
%11,1
%15
%17,6
%20
%25
%25
%33,3
%30
%42,9
%40
%66,7
The most common mistake in quoting is treating the target margin as a percentage added to cost. The second is leaving labour hours and overheads out of the cost. Put the two together and at year end you're looking at far less profit than you aimed for. If prices and costs come from the same place when you prepare a quote, the margin on every line is visible before the quote goes out. More on this in the article time and profit lost in the quoting process.
Frequently asked questions
Aren't profit margin and markup the same thing?
No. Margin is profit as a share of the selling price; markup is profit as a share of cost. If you add 25% to a product that costs 100, you sell it for 125, but your margin is 20%. For a 25% margin the price has to be 133.3.
What should I include in the cost?
Besides materials, include labour hours, any subcontractors and transport, and the share of overheads that falls on the product or job. For labour you can use the hourly cost tool. A price calculated on incomplete costs comes out too low, however correct the formula.
Why can a 10% discount wipe out half your profit?
A discount comes off the price, but the cost stays the same. So the whole discount comes out of profit. At a 25% margin, a 10% discount cuts the profit per unit by more than a third; to keep the same total profit you have to sell a lot more.
Are the numbers I enter sent anywhere?
Not unless you send them. The calculation is done entirely in your browser and nothing is saved. Your figures reach us only if you fill in and send the “Evaluate my result” form, so that we can get back to you.
Get quotes out in minutes, with the right margin
Let's set up a system where products, prices and costs sit in one place and every quote's margin is visible before it goes out.