The formula
Price = cost × (1 + markup ÷ 100)
A part that costs you $120 with a 35% markup sells for $162. The $42 difference is your profit on the part, which is 25.9% of the price. That second number is the margin, and it is always smaller than the markup.
Markup vs margin
| Markup | Margin | |
|---|---|---|
| Measured against | Your cost | The selling price |
| Formula | profit ÷ cost | profit ÷ price |
| $120 cost, $162 price | 35% | 25.9% |
| Used for | Setting prices | Checking profitability |
Mixing them up is a common and expensive mistake: if you want a 35% margin but apply a 35% markup, you end up with less than 26%. To hit a target margin, use the profit margin calculator instead.
Typical markups on materials
There is no single right number. Small, cheap parts often carry a higher percentage, because sourcing them costs you the same time as an expensive part. Big-ticket equipment usually carries a lower percentage. What matters is that the markup covers the time spent buying, collecting and storing materials, plus the risk of returns and warranty work.
Show materials on their own invoice line, separate from labor. Clients understand what they paid for, and you can see which side of the business makes the money.
Last checked October 23, 2026.