Markup and margin calculator for South Africa
Short answer: markup is profit divided by cost, and margin is profit divided by the selling price. A 40% markup is only a 28.6% margin. Enter what the job or item costs you, choose what you know (markup, margin or the price), and the calculator gives you the rest, plus the price with 15% VAT.
Price, profit, markup and margin
The formulas
- Selling price from a markup: cost × (1 + markup ÷ 100).
- Selling price from a margin: cost ÷ (1 − margin ÷ 100).
- Markup: (price − cost) ÷ cost × 100.
- Margin: (price − cost) ÷ price × 100.
- Price with VAT: price × 1.15 for a VAT-registered business. Use our VAT calculator to take VAT off a total as well.
Markup against margin
| Markup on cost | Margin on price |
|---|---|
| 10% | 9.1% |
| 20% | 16.7% |
| 25% | 20.0% |
| 30% | 23.1% |
| 40% | 28.6% |
| 50% | 33.3% |
| 100% | 50.0% |
The common mistake is to want a 30% margin and add 30% to the cost. That earns a margin of 23.1%. To really earn a 30% margin you need a markup of about 42.9%.
Worked example: pricing a trade job
A tiler's materials cost R2,400. They add a 20% markup for sourcing and handling, and charge labour at R450 an hour for 6 hours. These are example figures: use your own.
| Line | Amount |
|---|---|
| Materials: R2,400 cost + 20% markup | R2,880.00 |
| Labour: 6 hours at R450 | R2,700.00 |
| Subtotal | R5,580.00 |
| VAT at 15% | R837.00 |
| Total | R6,417.00 |
Showing materials and labour on separate lines also helps if the client wants to know what they are paying for. Our guide to writing a quote that gets accepted goes line by line, and the free quote templates for plumbers, electricians, builders, painters and roofers have the layout ready.
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Try Zuvo free for 7 days, no cardQuestions people ask
What is the difference between markup and margin?
Markup is profit as a percentage of what the item cost you. Margin is profit as a percentage of the price you sell it for. If something costs R1,000 and you sell it for R1,400, the profit is R400: a markup of 40% and a margin of about 28.6%. The same profit gives a smaller margin than markup.
How do I calculate markup?
Selling price = cost × (1 + markup ÷ 100). For a cost of R1,000 and a markup of 40%, the selling price is R1,000 × 1.4 = R1,400. To find the markup from two prices, divide the profit by the cost: (price − cost) ÷ cost × 100.
How do I calculate margin?
Margin = (price − cost) ÷ price × 100. To get a target margin, the selling price is cost ÷ (1 − margin ÷ 100). For a cost of R1,000 and a 30% margin, the price is R1,000 ÷ 0.7 = R1,428.57, which is a markup of about 42.9%.
Should I work out markup before or after VAT?
Before. VAT belongs to SARS, not to you, so it is never part of your profit. Work out your price excluding VAT first, then add 15% if you are VAT-registered. The calculator shows the price with VAT as a separate line.
What markup should I use on materials?
There is no universal figure. It has to cover what you spend finding, collecting and handling the materials, plus a share of your overheads and your profit. Work out your own overheads and see what markup your margin needs, then check it against what your market will pay.
A pricing calculator, not financial advice. The right markup depends on your overheads and your market.