Key takeaways:
Understanding how to calculate markup helps home service professionals set profitable prices and ensure each job supports business growth.
- Markup is the difference between your service price and total job costs. Subtract costs (labor, materials, overhead) from your selling price to determine your markup amount and use (markup / cost) x 100 to find your markup percentage.
- Apply markup consistently to all quotes and invoices. Building your markup percentage into every job reduces the risk of underpricing and increases profitability across your business.
- Typical markups vary by industry and job type. Service businesses commonly use higher markups on materials (20–50%) and lower markups on labor (10–30%), reflecting industry standards and material expenses.
- Regularly track and adjust your markup using cost data. Monitor expenses, compare competitor pricing, and use markup calculators or job costing software to keep your pricing strategy effective and ensure each job is profitable.
- Remember the difference between markup and margin. Markup is based on job costs, while margin measures profit as a percentage of revenue—they are not the same and should inform how you price and measure business performance.
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Markup is the amount you add to your costs to determine a service price. It’s how you make a profit on every job after labor, material, and overhead expenses are paid.
To calculate it, subtract your total job costs from the price you charge a customer:
Markup = service price – cost
Knowing how to calculate markup helps you price services profitably, preventing you from undercharging and leaving enough to cover your bills.
Use this guide to learn what markup percentage to aim for to keep prices fair while growing your service business.
Set the right markup pricing for your business:
How to calculate markup
There are two steps for calculating markup on cost. First, you need to know the base amount, which you calculate using this markup formula:
Markup = service price – cost
Then, use this formula to find out what your markup percentage is:
Markup percentage = (markup / cost) x 100
Having a percentage makes it easier to price consistently across jobs and gives you a quick way to assess profitability. Follow these steps for how to calculate markup percentage:
1. Determine total costs
Add up all the costs associated with a specific service, including labor, materials, and overhead costs. For example:
- Labor: $100
- Material: $40
- Overhead: $10
Total costs = $150
READ MORE: How to calculate operating costs
2. Add a selling price
Next, choose the amount you want to charge the customer on top of expenses. For example, $225. Then, subtract your total cost from the selling price to get your markup rate:
Markup = $225 – $150
That means your markup calculation would be $75.
Pro Tip: Many service business owners base their markup pricing strategy on a desired gross profit margin instead of choosing a random dollar amount. For example, if you want a 30% gross margin, you would add about 30% to your costs to set your selling price.
READ MORE: Pricing strategies for your service business
3. Calculate your markup percentage
The last step is to determine your markup percentage by using this formula:
Markup percentage = markup / cost x 100
For example, here’s what that would look like using markup of $75 and costs of $150:
75 / 150 x 100 = 50%
So, if your costs were $150 and you charged $225 for the service, your markup percentage would be 50%.
Want to skip the math? Use Jobber’s free pricing calculator to set your markup and see your target profit margin in real time.
4. Apply markup to quotes and invoices
Once you know your desired markup percentage, you need to build it into every quote and invoice you send. This ensures each job is profitable, preventing you from underpricing your services.
Jobber’s quoting tools let you set default markups on materials and labor, so your pricing is consistent across every job.
Markup percentage examples
Applying common markup percentages to your costs is simple. Here’s how different markups look on a job priced at $100.
| Job cost | Markup percentage | Selling price |
|---|---|---|
| $100 | 20% | $120 |
| $100 | 30% | $130 |
| $100 | 50% | $150 |
| $100 | 100% | $200 |
How to calculate your current markup percentage
To calculate how much your current markup is, you can use the same markup formula as above:
Markup % = (profit / total cost) x 100
This time, you need to apply it to a job you already completed instead of a future job. You’ll need to know:
- Your total costs for the job, including labor, materials, and overhead.
- The total amount you charged the client for the job, including taxes, discounts, and deposits.
- How much you have left after costs are deducted from the sale price (gross profit).
If your total costs were $350 and you charged the client $500, here’s how you would calculate your markup percentage on that job:
- $500 – $350 = $150 (sale price minus total cost)
- $150 / $350 = 0.43 (gross profit divided by total cost)
- 0.43 x 100 = 43% (to get your markup percentage)
Your markup percentage for that job would be 43%.
When I first started, we didn’t really know how to price. I was just making enough just to make money.
I didn’t realize there was insurance, there’s labor, everything that went into the business.
To calculate your markup this way, you need accurate cost data for every job. Jobber’s job costing software tracks labor, materials, and expenses in one place—so you can see your real markup amount, not your estimated one.
What is markup vs margin?
Markup is the amount you charge on top of job costs. Margin measures how much of your selling price is profit. For example, if your markup is 50%, your margin is 33%. They are not the same number, even though both are calculated using the same cost and price information.
For example, if you charge $500 for a job, and your costs are $400:
Your markup would be $500 – $400 = $100, or 25%
Your profit margin percentage would be $100 / $500 x 100 = 20%
This is because markup is calculated based on cost, while margin is calculated based on revenue. In this example, $100 is 25% of the cost ($400), but only 20% of revenue ($500).
READ MORE: What is revenue vs profit?
Here are the formulas for markup vs profit margin:
| Markup percentage formula | Profit margin percentage formula |
|---|---|
| Markup % = (selling price – cost) – cost x 100 | Profit margin % = (selling price – cost) / cost x 100 |
You can also use Jobber’s free profit margin calculator. It automatically calculates your profit margin based on costs and service pricing.
Here are some common examples of markup vs. profit margin you can use to assess pricing and profitability.
| Markup | Profit margin |
|---|---|
| 20% | 17% |
| 30% | 23% |
| 50% | 33% |
| 100% | 50% |
How much should your markup be?
Markup varies by industry, services, customers, and competition. Industries with higher supply and material costs typically have lower markup percentages than those with limited expenses.
These are general ranges for typical markups in different service industries:
| Industry | Labor markup | Materials markup | Subcontractor markup |
|---|---|---|---|
| Plumbing | 15–30% | 25–50% | 10–20% |
| Electrical | 10–25% | 20–50% | 10–20% |
| HVAC | 10–30% | 20–50% | 10–20% |
| Commercial cleaning | 10–20% | 20–40% | 10–15% |
| Landscaping | 10–20% | 20–50% | 10–15% |
| Tree care | 10–20% | 20–40% | 10–15% |
| Roofing | 10–20% | 20–50% | 10–20% |
For example:
- A landscaper may mark up fertilizer by 50%, labor by 20%, and subcontracting by 15%.
- A plumber may mark up parts and fixtures by 40%, charge 25% for labor, and 10% for any subcontracted work.
- An HVAC technician may apply a 45% markup to parts, 30% for labor, and 20% for a specialized subcontractor.
I typically find a middle ground between what I pay and what the customer would pay if they buy it themselves.
They’re still getting a deal buying it through me, but I’m still making more money than I paid for it.
Tips for setting markup in a service business
Use these tips to ensure the markup you set supports your business’s profitability long-term:
- Know your costs. When calculating your costs, include everything from labor, materials, equipment, and fuel to software subscriptions and insurance. Any expenses you forget to include will eat into profit.
- Research competitors. Understanding what other service providers in your area are charging will help you stay competitive with your pricing model and standard markup.
- Adjust regularly. Monitor the cost of equipment and materials, and adjust your markup to reflect market changes.
- Use a markup calculator. Jobber’s service price calculator will help you set and adjust your pricing model and standard markup price in real time.
- Monitor markup. Track and analyze markup to ensure each job is profitable. If you aren’t sure whether you’re charging enough markup, Jobber AI analyzes your job data to help you spot jobs where you’re undercharging and identify opportunities to adjust your pricing.
- Consider market demand. If your services are in demand, you may be able to increase markup and turn a higher profit. For example, if you offer niche services or have few competitors.
About once a year, I have someone call around to cleaning companies in our area. I usually set my prices somewhere in the middle.
Why markup matters
Markup is what ensures you not only have enough money to keep your business afloat, but to invest in it. It provides the funds you need to scale your business, helping you:
- Source better talent
- Offer more competitive wages and benefits
- Train and educate staff
- Get better equipment
- Expand to new service areas
- Add to your service list
Without markup, it’s hard to maintain healthy profit margins, potentially stalling growth. Staying on top of markup with job costing software can help keep pricing accurate so profit stays steady.
Originally published in March 2020. Last updated on April 25, 2026.
Frequently Asked Questions
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Markup is the amount you add to your costs to determine a selling price. Margin is the percentage of your selling price that is profit. Markup is based on costs, whereas margin is based on revenue.
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A good markup percentage is 10–50%, but it depends on your industry, services, costs, location, and competition. Many service businesses use a higher markup on materials (20–50%) and lower markups on labor (10–30%) to offer competitive pricing while maintaining profitability.
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Depending on job types and costs, contractors typically mark up materials by 20–50%. Specialized or harder-to-source materials may justify higher markups.
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Your markup pricing should be high enough to cover costs and generate a profit while staying competitive in your industry and market. Most service businesses set markup based on pricing structure and a desired profit margin instead of a fixed number.
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No, a 50% markup is not the same as a 50% margin. A 50% markup is equal to a 33% margin because markup is based on costs, while margin is based on revenue. For example, if a job costs you $100 and you charge $150, that’s a 50% markup and 33% margin.