Guide, 2026-11-05

Margin vs markup: how to price a job and quote it in a spreadsheet

Tradespeople, installers and small service businesses often lose money on jobs that looked profitable, and the cause is usually the same: confusing markup with margin. They sound alike and they are not the same number. Here is how to tell them apart, price from the margin you need, and finish a quote that is ready to send.

Markup and margin in one line each

Markup is the percentage you add on top of your cost: price = cost × (1 + markup). Margin is the share of the price you keep: margin = (price − cost) ÷ price. For the same job, margin is always smaller than markup.

Step 1: Add up the real cost

Include labour hours, materials at what you pay for them, and the odd costs that get forgotten: equipment hire, skip, callout, delivery. A line-by-line list stops you from pricing from memory.

Step 2: Price from the margin you need, not the markup you like

To reach a target margin, divide the cost by one minus the margin: price = cost ÷ (1 − target margin). Also set a floor, the lowest margin you will accept at all. Anything below the floor is a job you should think twice about.

A worked example

A fictional job costs $600 in total. Compare two ways of pricing it.

A 30% markup gave only 23.1% margin, a difference of $77.14 on one job. If your target is a 30% margin, the markup you actually need is $257.14 ÷ $600 = 42.9%.

Discounts bite harder than they look. Give 10% off the $780 and the price becomes $702, so profit is $702 − $600 = $102 and margin falls to $102 ÷ $702 = 14.5%. A 10% discount removed more than 40% of the profit ($78 of $180).

Step 3: Discount, tax and deposit

Show the customer the price, then any discount, then tax at your own local rate, then the deposit. Using a fictional 20% tax rate on the $702: tax is $140.40, the total is $842.40, a 25% deposit on that total is $210.60 and the balance due is $631.80. Check what tax applies to your work before choosing the rate. The customer should see these prices, never your costs.

Step 4: Keep a register and know your break-even

Record every quote with a status (draft, sent, accepted, declined, expired) and a follow-up date. Win rate = accepted ÷ quotes sent. If you sent 12 quotes and 5 were accepted, the win rate is 41.7%.

For a simple break-even: jobs needed per month = fixed monthly costs ÷ average margin per accepted job. With $2,400 of fixed costs and an average of $400 margin per job, you need 6 jobs a month just to cover costs. It is an estimate, not a forecast, but it tells you whether a quiet month is a problem.

Common mistakes

• Quoting a markup percentage and reading it as margin.
• Forgetting small costs such as hire, delivery and disposal.
• Agreeing a discount without checking the new margin.
• Showing the customer a quote that reveals your cost breakdown.
• Sending quotes and never following up the ones nearing expiry.

When a ready-made quote builder saves time

For one job a calculator is enough. When you quote every week, QuoteBook does the repeated work: cost, price, margin and markup for every line and every quote, BELOW FLOOR and Below target flags against your own margin settings, the price needed to reach your target, a printable customer quote of up to 25 lines (prices only, never your costs), discount, tax and deposit, a quote register with win rate and value accepted, and the break-even estimate. It makes quotes only: no invoicing, time tracking or payments, one currency per file and no tax advice. Tested in Microsoft Excel for Windows (Microsoft 365).