Markup vs margin: price a job so you keep what you think you keep

Tradies Sidekick team · 1 November 2026

Markup and margin both describe profit on a job, but they measure it against different things. Mix them up and every quote you send is lower than you think. Here's the difference, how to price a job for the margin you actually want, and what margin a tradie should aim for.

Markup vs margin: the difference in one sentence

Markup is what you add on top of your cost. Margin is the share of the price you keep. They start from the same profit but divide it by different numbers, so the percentages never match.

Say a job costs you $1,000 in labour and materials and you add 30%:

Same $300 profit. A 30% markup is a 23% gross margin. If you've been adding 30% and telling yourself you make 30%, you're seven points short on every job.

Why it matters for quoting

Your accountant, your profit and loss, and most industry benchmarks talk in margin. If your target is "30%" and you hit it by adding 30% to cost, you'll come in at 23% and wonder where the money went. Spread across a year of quotes, that gap is often the difference between a business that pays the owner properly and one that doesn't.

It also cuts the other way when discounting. Take 10% off a quote priced at a 23% margin and you've given away nearly half your profit on that job, not a tenth of it.

How to price a job for the margin you want

Work backwards from the margin, not forwards from the cost:

1. Add up the job cost. Labour hours × what an hour really costs you (wages, super, leave, non-billable time), plus materials and anything else the job needs: tip fees, hire, parking.
2. Pick your target margin. For example 30%.
3. Divide the cost by (1 − margin). $1,000 ÷ (1 − 0.30) = $1,000 ÷ 0.70 = $1,429 ex GST.
4. Add GST for the customer's price: $1,429 × 1.1 = $1,572.

Check it: $1,429 − $1,000 = $429 profit, and $429 ÷ $1,429 = 30%. To get a 30% margin you need roughly a 43% markup.

Markup to margin conversion table

The formulas: margin = markup ÷ (1 + markup). Markup = margin ÷ (1 − margin).

What margin should a tradie make?

There's no single right number, because it depends on how much of the job is labour and how much is materials. As a starting point:

• Labour-heavy service work (pool servicing, cleaning, lawn and garden, maintenance contracts) usually needs a higher gross margin, often 40–60%, because there are few materials to mark up and every overhead has to come out of labour.
• Material-heavy jobs (installs, renovations) often run at a lower margin on the total, with materials at a smaller margin and labour at a bigger one.
• Small call-outs need a minimum charge. A 30% margin on a $150 job doesn't cover the drive.

The better test is whether your margin covers your overheads and pays you. The break-even calculator shows how much work your margin needs to carry each month.

The cost side is where quotes go wrong

Most underpriced quotes aren't caused by the margin. They're caused by the cost. Using the wage rate instead of the real cost of an hour (super, leave, travel, admin) can understate labour by a third or more. Work it out once with the employee cost calculator, and use that figure in every quote.

Checking margins after the job

A quote is a guess. The margin you actually made shows up when the hours are logged and the invoice is paid. Tradies Sidekick reads the hours and materials from ServiceM8 and the invoices from Xero, and shows the real margin on every customer, and month by month for the whole business. You can see which customers hit the margin you priced for and which don't.