PlumbMargin

Markup vs margin for plumbing quotes

Markup and margin answer different questions. Markup asks how much you add on top of cost. Margin asks how much of the price you keep after cost. They use the same profit figure and a different denominator, so the percentages are not interchangeable.

If materials cost you £100 and you apply a 25% markup, the selling value is £125. The profit is £25. The margin is 25 divided by 125, which is 20%, not 25%. A job you thought was a quarter of the price in profit is a fifth of the price.

The other direction matters when you have a target. A 40% margin is not a 40% markup. The price has to be cost divided by (1 − 0.40). On a true cost of £165, that is £275 before tax. The markup on that cost is £110, which is about 67% of cost, while the margin is 40% of the price.

Plumbing quotes mix both ideas. Material lines are often built with a markup on the cost including waste. Labour is often a customer rate per hour that already sits above the internal cost. Overhead is usually a percentage of direct cost, and it is a cost, not profit. If you only look at the material markup, the labour rate can hide a thin margin once parking, waste disposal and a subcontractor are included.

A practical check before you send the quote:

  1. Add material cost, including a waste allowance you believe you will use.
  2. Add labour at your internal cost, not the rate on the customer quote.
  3. Add other direct costs and subcontract cost.
  4. Add overhead as a percentage of that direct cost.
  5. Subtract that true cost from the pre-tax price. That is gross profit.
  6. Divide gross profit by the pre-tax price for margin, and by the true cost for markup.

PlumbMargin keeps those steps visible and does not change the price unless you choose “Use target price”. The markup vs margin calculator converts a single percentage. The quoting app applies the same definitions to a whole job.

Nothing on this page is a recommended markup for your business. Your overhead, van, insurance and how many hours you can sell all change the percentage you need.