{"id":5333,"date":"2026-04-10T03:16:28","date_gmt":"2026-04-10T03:16:28","guid":{"rendered":"https:\/\/www.simplywise.com\/blog\/?p=5333"},"modified":"2026-04-10T03:16:28","modified_gmt":"2026-04-10T03:16:28","slug":"how-to-set-markup-price-jobs-for-profit","status":"publish","type":"post","link":"https:\/\/www.simplywise.com\/blog\/how-to-set-markup-price-jobs-for-profit\/","title":{"rendered":"How to Set Your Markup and Price Jobs for Profit"},"content":{"rendered":"
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Home<\/a> › Blog<\/a> › Markup and Pricing<\/div>\n

How to Set Your Markup and Price Jobs for Profit<\/h1>\n

The difference between markup and margin is the difference between making money and wondering where it all went. Here is how to get your pricing right.<\/p>\n

SimplyWise Team<\/strong> · April 9, 2026 · 20 min read<\/div>\n<\/div>\n<\/div>\n

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The $8,000 Mistake You Make Without Realizing It<\/h2>\n

A buddy of mine, an electrician who has been in the trade for 15 years, told me this story a few months ago. He had been running his own crew for three years, staying busy, doing great work. Clients loved him. He was billing over $600,000 a year. But every December, his accountant would tell him the same thing: barely broke even.<\/p>\n

Turned out he had been confusing markup and margin the entire time. He thought he was adding a 30% profit margin to his jobs. What he was actually doing was adding a 30% markup, which translates to about a 23% margin. On $600K in revenue, that confusion was costing him roughly $42,000 a year in profit he thought he was earning but was not.<\/p>\n

He is not alone. This is one of the most common and most costly mistakes contractors make, and it comes down to a simple math misunderstanding that nobody teaches you in trade school.<\/p>\n

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THE CORE ISSUE<\/div>\n

Markup is calculated on your costs. Margin is calculated on your selling price.<\/strong> They are always different numbers, and using the wrong one means you are making less money than you think on every single job. This guide explains the difference and shows you exactly how to set your pricing for real profitability.<\/p>\n<\/div>\n<\/div>\n<\/div>\n

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Markup vs. Margin: The Critical Distinction<\/h2>\n

Let us start with the basics because getting these definitions right is the foundation of everything that follows.<\/p>\n

Markup defined<\/h3>\n

Markup<\/strong> is the percentage you add to your costs to arrive at the selling price. If your total costs on a job are $40,000 and you apply a 25% markup, your selling price is $50,000. The markup is calculated on the cost base.<\/p>\n

Formula: Selling Price = Cost x (1 + Markup %)<\/strong><\/p>\n

$40,000 x 1.25 = $50,000<\/p>\n

Margin defined<\/h3>\n

Margin<\/strong> (also called gross profit margin or net margin depending on context) is the percentage of the selling price that represents profit. In the example above, $10,000 profit on a $50,000 selling price is a 20% margin.<\/p>\n

Formula: Margin = (Selling Price – Cost) \/ Selling Price<\/strong><\/p>\n

($50,000 – $40,000) \/ $50,000 = 20%<\/p>\n

Why the difference matters<\/h3>\n

Notice what happened: a 25% markup produced a 20% margin. Not 25%. If you told yourself “I add 25% to my costs so I make 25% profit,” you are making 20%. On a $600,000 annual revenue, that 5-point gap represents $30,000 in profit you think you are earning but are not.<\/p>\n

The gap gets worse as the percentages go up. A 50% markup only gives you a 33% margin. A 100% markup (doubling your costs) gives you a 50% margin. The numbers are never the same, and the markup percentage is always higher than the margin percentage for the same dollar amount of profit.<\/p>\n

The conversion table<\/h3>\n

Pin this to your wall, tape it inside your truck visor, or save it on your phone. This table converts between markup and margin so you always know exactly where you stand.<\/p>\n

\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
Markup %<\/th>\nMargin %<\/th>\nExample (on $40,000 cost)<\/th>\n<\/tr>\n<\/thead>\n
10%<\/strong><\/td>\n9.1%<\/td>\nSell at $44,000, profit $4,000<\/td>\n<\/tr>\n
15%<\/strong><\/td>\n13.0%<\/td>\nSell at $46,000, profit $6,000<\/td>\n<\/tr>\n
20%<\/strong><\/td>\n16.7%<\/td>\nSell at $48,000, profit $8,000<\/td>\n<\/tr>\n
25%<\/strong><\/td>\n20.0%<\/td>\nSell at $50,000, profit $10,000<\/td>\n<\/tr>\n
30%<\/strong><\/td>\n23.1%<\/td>\nSell at $52,000, profit $12,000<\/td>\n<\/tr>\n
35%<\/strong><\/td>\n25.9%<\/td>\nSell at $54,000, profit $14,000<\/td>\n<\/tr>\n
40%<\/strong><\/td>\n28.6%<\/td>\nSell at $56,000, profit $16,000<\/td>\n<\/tr>\n
50%<\/strong><\/td>\n33.3%<\/td>\nSell at $60,000, profit $20,000<\/td>\n<\/tr>\n
67%<\/strong><\/td>\n40.0%<\/td>\nSell at $66,800, profit $26,800<\/td>\n<\/tr>\n
100%<\/strong><\/td>\n50.0%<\/td>\nSell at $80,000, profit $40,000<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n

Quick conversion formulas<\/h3>\n