HVAC
HVAC Markup vs Margin Calculator
Convert between markup and margin so a target set in one is not applied as the other.
Result
Markup is profit measured against cost; margin is profit measured against the selling price. They are never the same number above zero, and the gap widens as the percentage climbs. At a 50% target you need to double your cost, not add half of it.
Read HVAC markup vs marginWhat moves the number
- Which measure your targets are set in, and which your estimates are built in.
- Whether everyone in the business uses the words the same way.
- The cost base the percentage is applied to.
Where this one goes wrong
A business where the budget is written in margin and the estimates are built in markup. Both look right in isolation and the company is consistently less profitable than its own numbers say.
Questions
About this calculator
What is the difference?
Markup measures profit against cost. Margin measures profit against the selling price. The same job always shows a higher markup number than margin number.
Which should I set targets in?
Margin, because that is what your accounts report. Convert to markup when pricing up from cost, rather than reusing the same number.
Where does this cost the most money?
On high volume repeat work, where a small per-job error repeats hundreds of times. It is invisible per job and substantial across a year.
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How to use this calculator
- Total job cost ($). Enter your own figure; the page starts at $5,000.
- I want to enter. Enter your own figure; the page starts at A target margin.
- Margin or markup to apply (%). Enter your own figure; the page starts at 40%.
- Discount you are considering (%). Enter your own figure; the page starts at 10%.
The result updates as you type, so you can try a figure, see what it does to selling price, and change it back. Nothing you enter is sent anywhere or saved.
A worked example
These are the figures the calculator opens with. Every number in the results column below is produced by the same calculation the page runs, so you can follow it through before putting your own figures in.
What goes in
| Input | Value |
|---|---|
| Total job cost | $5,000 |
| I want to enter | A target margin |
| Margin or markup to apply | 40% |
| Discount you are considering | 10% |
What comes out
| Result | Value |
|---|---|
| Selling price main result | $8,333 |
| Gross profit | $3,333 |
| Actual gross margin | 40.00% |
| Equivalent markup | 66.67% |
A 40% margin on $5,000 of cost sells at $8,333: a 40.00% gross margin, which is the same thing as a 66.67% markup. Take 10% off and the price falls to $7,500, the margin to 33.33%, and you have given away 25.00% of the gross profit on the job.
How sensitive the answer is
Holding everything else steady and changing only total job cost, this is what happens to selling price. It is worth knowing which of your inputs the answer actually hinges on, and which barely move it.
| Total job cost ($) | Selling price |
|---|---|
| $2,500 | $4,167 |
| $3,750 | $6,250 |
| $5,000 example above | $8,333 |
| $7,500 | $12,500 |
| $10,000 | $16,667 |
Every other input is held at the example value while this one changes, which is not how a real job behaves. Treat it as a guide to which number matters most, not as five separate quotes.
What each figure means
- Total job cost ($)
- A money amount, starting at $5,000.
- I want to enter
- Choose from A target margin, A markup.
- Margin or markup to apply (%)
- A percentage, between 0 and 400, starting at 40%.
- Discount you are considering (%)
- A percentage, between 0 and 60, starting at 10%.
What the results tell you
| Result | What it is |
|---|---|
| Selling price | The headline result. A money figure. |
| Gross profit | A money figure. |
| Actual gross margin | A percentage. |
| Equivalent markup | A percentage. |
Before you rely on this number
Sizing, capacity and load figures here are planning estimates. A real installation depends on the manufacturer's data for the specific equipment, the duct system it is going into, and a proper load calculation for the building. Use this to sanity-check a number or price a job, not to select equipment.
Keep going
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Open calculatorThe mistake this calculator exists to prevent
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