The most expensive pricing mistake in the trades is not undercharging on purpose, it is confusing two words that sound the same and are not: margin and markup. Many tradespeople and builders apply an uplift on cost believing that percentage is their profit on the sale. It is not. And the difference, repeated quote after quote, eats a big chunk of the year's profit.
This calculator puts numbers on that difference. Enter the job cost, choose how you want to price it, and instantly see the price to charge, your profit, and the exact equivalence between margin and markup.
Margin and markup are not the same thing
- Markup is the uplift you add on your cost. Cost 1,000, markup 30%, price 1,300.
- Margin is profit expressed on the selling price. In that same example, the £300 profit on a £1,300 price is a 23.1% margin, not 30%.
The trap is that markup always sounds better than it is. The higher the percentage, the wider the gap between what you think you make and what you actually make.
Table: one number, two meanings
With a job cost of £1,000, here is what happens depending on whether you read it as markup or as margin:
| Percentage | Price if markup | Real margin of that price | Price if margin | Real markup of that price |
|---|---|---|---|---|
| 20% | £1,200 | 16.7% | £1,250 | 25.0% |
| 30% | £1,300 | 23.1% | £1,429 | 42.9% |
| 40% | £1,400 | 28.6% | £1,667 | 66.7% |
| 50% | £1,500 | 33.3% | £2,000 | 100.0% |
Read the 30% row: if you wanted a 30% margin but applied a 30% markup, you charged £1,300 instead of £1,429. That is £129 less on a single job, with no one pushing back.
How underpricing compounds
That £129 looks small. Multiply it. A business that closes fifty jobs a year with the same gap leaves more than £6,000 on the table, all of it pure profit, because the cost was already covered. It is not a drop in sales or a lost customer: it is money that was on the table and stayed there because of a formula mix-up.
The compounding effect is worse once underpricing becomes a habit. If you set prices by markup believing it is margin, every rise in material costs catches you with less cushion than you think, and the big jobs (where the gap in pounds is largest) are the ones that steal the most profit.
How to use the result
Start from the real, full cost of the job: materials, direct labour and a proportional share of your overheads (travel, insurance, tools, office, warranty). Then decide whether you reason in margin or markup, and keep that basis across every quote so you never mix them.
If your goal is a specific net profit on the sale, use margin mode: the tool gives you the exact price that guarantees it. The operations page explains how to systematise costs and pricing, and the conversion page how to present that price so it closes. To go deeper on writing the quote itself, read quotes that win more jobs.
Once you have your number, compare it with our other tools or talk to us to review your pricing structure with your real data.