Markup vs margin calculator
Markup and builders margin do the same arithmetic. What differs is what you apply them to, and what the percentage you add works out to as a share of the final price. Work it either way below.
Figures exclude GST.
You cannot keep 100% of the price on a job that costs you something.
Figures exclude GST.
What each one is applied to
Both add a percentage on top of a cost. The formula is identical. What changes is the base you apply it to.
- Markup is generally what a contractor adds to materials they buy and on-charge. You pick up timber for $300, it goes on the invoice at $345 with 15% on it. It is not usually applied to your own labour.
- Builders margin is applied across the whole job, labour and materials together, by the builder running it. It covers coordinating the trades, carrying the risk and the overheads behind the business.
So a painter buying paint and charging it on is applying markup. A builder pricing a renovation with three subbies and their own crew is applying builders margin. A contractor can be doing both on the same job: markup on their materials, and their whole price then sits inside the builders margin further up the chain.
The percentage you add is not the share you keep
This part is worth having straight, and it applies to markup and builders margin equally.
price = cost × (1 + percentage added)
share of total = added ÷ (100 + added)
Add 15% to $20,000 and you get $23,000. The $3,000 you added is 15% of what you started with, and 13.04% of what you ended with. Both are true. They are simply measured against different numbers.
It matters when you work backwards. If you want the money you keep to be 15% of the total, adding 15% will not get you there. You need to add 17.65%. The second tab does that calculation.
The conversion table
| Percentage you add | Share of the final price |
|---|---|
| 10% | 9.09% |
| 15% | 13.04% |
| 20% | 16.67% |
| 25% | 20.00% |
| 30% | 23.08% |
| 50% | 33.33% |
| 100% | 50.00% |
The gap widens as the numbers climb. At 10% it is under a percentage point. Double your price and you are keeping half of it, not all of it.
A worked example
A painter quotes a repaint. Paint and sundries cost $1,200, and their labour comes to $4,800.
- Markup on materials at 15%: $1,200 × 1.15 = $1,380
- Labour charged at their rate: $4,800
- Their price, ex GST: $6,180
If that painter is a subbie to a builder, the builder then applies their own margin across the whole job, that $6,180 included, along with every other trade and their own costs.
Where people get caught
- Assuming somebody else means the same thing you do. When a builder says 25%, it is worth knowing whether they mean what they add or what they keep.
- Working backwards with the wrong formula. If you need a set share of the total, the percentage to add is always the larger number.
- Marking up an incomplete cost. Neither figure helps if delivery, wastage, tip fees or your own admin time were never in the cost.
- Forgetting wastage on materials. Marking up exactly what the plan says, when you will actually buy 10% more, leaves you short before the percentage is even applied.
Doing this on every job?
BuildScope applies your percentage across the whole quote rather than line by line, so this is not arithmetic you repeat on every job. Build the scope, set your margin and GST preferences, export the document.
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