Convert fabrication job cost into a selling price using markup, then see the resulting profit, margin and customer price.
If you know the profit margin you want rather than the markup, calculate the markup required to reach that margin.
Markup adds a percentage of the job cost to establish the selling price.
The combined formula is:
For example, a fabrication job costing $4,000 with a 25% markup produces a $5,000 selling price and $1,000 gross profit before any additional costs or taxes.
Markup and profit margin describe the same profit from different reference points.
A 25% markup does not mean a 25% profit margin. With a $4,000 cost and 25% markup, the selling price is $5,000 and the profit margin is 20%.
| Markup | Equivalent Margin |
|---|---|
| 10% | 9.09% |
| 15% | 13.04% |
| 20% | 16.67% |
| 25% | 20.00% |
| 30% | 23.08% |
| 40% | 28.57% |
| 50% | 33.33% |
| 75% | 42.86% |
| 100% | 50.00% |
Markup should normally be applied to the complete cost basis used by the business, not just the raw material purchase price.
If important costs are omitted from the cost basis, the calculated selling price may look profitable while producing a much lower actual margin.
A markup calculator is particularly useful when a fabrication shop has already established the complete estimated cost of a job and wants to convert that cost into a quotation.
For example, if material, labor, overhead and other costs total $8,500 and the shop uses a 30% markup:
The resulting profit is $2,550 before tax, equivalent to a 23.08% margin on the selling price.
If the business works with a target margin rather than a markup, the required markup can be calculated directly.
For example, a 20% target margin requires a 25% markup.
If a customer is likely to receive a discount, simply adding markup and then discounting the quote can reduce the intended margin.
The target-margin calculator allows an expected discount to be included so the list price can be increased enough to preserve the desired net selling price.
Tax or VAT is normally collected from the customer and is not operating profit. The calculator therefore displays the selling price before tax separately from the final customer price.
Actual tax treatment depends on the applicable jurisdiction, registration status and transaction.
At zero markup, the selling price equals the entered job cost.
Any selling price below the cost produces a loss before considering any other omitted costs.
How do I calculate a fabrication selling price?
Multiply the complete job cost by 1 plus the markup percentage divided by 100.
What is a 25% markup on $4,000?
The markup is $1,000, producing a selling price of $5,000 before tax.
Is 25% markup the same as 25% margin?
No. A 25% markup produces a 20% profit margin.
What markup should a fabrication shop use?
There is no universal percentage. The appropriate markup depends on overhead, market conditions, risk, capacity, competition and required return.
Can I calculate markup from a target margin?
Yes. Enter the target margin in the second calculator to determine the required markup.
Should overhead be included before markup?
If the markup is intended to cover overhead and generate profit, the relevant overhead should be included in the cost basis first.
Does VAT count as profit?
Normally no. VAT or sales tax collected from the customer is generally treated separately from operating revenue, subject to the applicable tax rules.
Can I use this calculator for actual completed jobs?
Yes. Enter the actual final cost to evaluate what selling price and markup would have produced the desired result.