Cleaning markup vs. profit margin

Understand why a 30% markup does not produce a 30% profit margin.

The denominator changes the answer

Markup measures profit relative to cost. Margin measures profit relative to price. With $140 of estimated job costs, adding a 30% markup gives a $182 price. The $42 difference is 30% of cost, but only about 23.1% of the price.

Work backward from the margin

To model a 30% margin, divide cost by 0.70: $140 ÷ 0.70 = $200. The $60 difference is 30% of the $200 price. CleanBidKit uses cost ÷ (1 − target margin), then rounds the result up to the next whole dollar. The percentages here are examples, not a recommended margin.

A good formula cannot fix missing costs

A margin calculated without owner labor, paid travel, supplies or a share of overhead can look healthier than the job really is. Enter every cost category consistently. If you include an expense in one category, do not count it again in another.

Check the completed job

Compare the agreed price with the actual cost after the visit. If the work took longer, record why. The difference can reveal a scope issue, an optimistic time estimate, or an expense you left out. Use that record when preparing the next quote.

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