Markup and margin are not the same thing
This is where a lot of tradesmen quietly lose money. Markup is your profit measured against your cost. Margin is your profit measured against your selling price. The same job has two different percentages.
- Markup: R1,000 cost + 40% markup = R1,400 price. The R400 profit is 40% of the cost.
- Margin: that same R400 profit is only 28.6% of the R1,400 price.
Why it matters: if you think "I make 40%" but you're quoting on markup, your real margin is lower. Know which number you're working in before you price the job.
What markup should a tradesman use?
It depends on the work, but a common starting point is 15%–30% on materials (to cover your time sourcing, collecting and carrying them) and pricing labour at your true hourly rate — including the unbilled hours: travel, quoting, admin and the days it rains. The mistake is marking up materials but underpricing your own time.
Don't forget VAT
Markup and VAT are separate. Work out your selling price first, then add 15% VAT on top if you're registered. Use the VAT calculator for that step.
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