What Does Subtotal Mean and Why Does It Matter on Invoices?
A subtotal is the sum of a group of amounts before you calculate the final total. On an invoice, a subtotal adds several item amounts
Markup vs. Margin Table: Are You Pricing Your Jobs Correctly?
Markup and gross profit margin are two ways to measure the difference between the cost of a product or service and its selling price. Although they are closely related, they use different calculations. Confusing the two can lead to pricing that falls short of your company’s profit goals.
Markup percentage is calculated using cost as the base, while gross profit margin percentage is calculated using the selling price. For further clarification, the IRS’s explanation of gross profit and markup provides additional detail on how these percentages differ.
For example, if a part costs $100 and you sell it for $150, the markup is 50%, but the gross profit margin is only 33.33%.
Markup vs. Gross Profit Margin Table
Use the following table to compare markup percentages with their corresponding gross profit margins and price multipliers. The multiplier helps you calculate a selling price by multiplying the item’s cost by the multiplier expressed as a decimal.
| Markup % | Gross Profit Margin % | Price Multiplier |
| 20% | 16.67% | 1.20 |
| 21% | 17.36% | 1.21 |
| 22% | 18.03% | 1.22 |
| 23% | 18.70% | 1.23 |
| 24% | 19.35% | 1.24 |
| 25% | 20.00% | 1.25 |
| 26% | 20.63% | 1.26 |
| 27% | 21.26% | 1.27 |
| 28% | 21.88% | 1.28 |
| 29% | 22.48% | 1.29 |
| 30% | 23.08% | 1.30 |
| 31% | 23.66% | 1.31 |
| 32% | 24.24% | 1.32 |
| 33% | 24.81% | 1.33 |
| 34% | 25.37% | 1.34 |
| 35% | 25.93% | 1.35 |
| 36% | 26.47% | 1.36 |
| 37% | 27.01% | 1.37 |
| 38% | 27.54% | 1.38 |
| 39% | 28.06% | 1.39 |
| 40% | 28.57% | 1.40 |
| 41% | 29.08% | 1.41 |
| 42% | 29.58% | 1.42 |
| 43% | 30.07% | 1.43 |
| 44% | 30.56% | 1.44 |
| 45% | 31.03% | 1.45 |
| 46% | 31.51% | 1.46 |
| 47% | 31.97% | 1.47 |
| 48% | 32.43% | 1.48 |
| 49% | 32.89% | 1.49 |
| 50% | 33.33% | 1.50 |
| 51% | 33.77% | 1.51 |
| 52% | 34.21% | 1.52 |
| 53% | 34.64% | 1.53 |
| 54% | 35.06% | 1.54 |
| 55% | 35.48% | 1.55 |
| 56% | 35.90% | 1.56 |
| 57% | 36.31% | 1.57 |
| 58% | 36.71% | 1.58 |
| 59% | 37.11% | 1.59 |
| 60% | 37.50% | 1.60 |
| 61% | 37.89% | 1.61 |
| 62% | 38.27% | 1.62 |
| 63% | 38.65% | 1.63 |
| 64% | 39.02% | 1.64 |
| 65% | 39.39% | 1.65 |
| 66% | 39.76% | 1.66 |
| 67% | 40.12% | 1.67 |
| 68% | 40.48% | 1.68 |
| 69% | 40.83% | 1.69 |
| 70% | 41.18% | 1.70 |
| 71% | 41.52% | 1.71 |
| 72% | 41.86% | 1.72 |
| 73% | 42.20% | 1.73 |
| 74% | 42.53% | 1.74 |
| 75% | 42.86% | 1.75 |
How to Calculate Markup and Gross Profit Margin
The table above shows how markup percentages correspond to gross profit margins. However, you may need to calculate either percentage for a specific job or determine what to charge to reach a target. The formulas below can help you do that.
- Markup percentage: (Selling Price − Cost) ÷ Cost × 100
- Gross profit margin percentage: (Selling Price − Cost) ÷ Selling Price × 100
- Selling price using markup: Cost × (1 + Markup Percentage)
- Selling price using gross profit margin: Cost ÷ (1 − Gross Profit Margin Percentage)
For example, suppose a part costs $100 and you want to apply a 30% markup. First, multiply the cost by 1.30 to determine the selling price:
$100 × 1.30 = $130
At that price, your gross profit is $30, but your gross profit margin is only 23.08% ($30 ÷ $130). That’s because markup uses cost as its base, whereas gross profit margin uses the selling price.
If you want a 30% gross profit margin instead, divide the $100 cost by 0.70 (1 − 0.30):
$100 ÷ 0.70 = $142.86
As a result, the selling price gives you a gross profit margin of approximately 30%. For a more detailed explanation of the relationship between these calculations, see AccountingCoach’s guide to markup and gross margin.
Why Accurate Job Costs Matter
For contractors, the cost used in pricing needs to reflect the work being performed. Materials are only part of the equation. In addition, labor, equipment, subcontractors, and other job costs can affect profitability. Aptora’s guide to cost accounting and job costs explains how tracking these costs supports better pricing decisions.
Keep in mind that a markup or gross profit margin target does not guarantee net profit. Your selling prices must generate enough gross profit to cover operating expenses and leave the profit your business needs. Therefore, reviewing actual job costs alongside estimates can help you identify where pricing needs attention. Aptora’s job costing software overview explains this process in more detail.
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The Aptora Editorial Team shares practical insights on accounting, bookkeeping, financial management, and business operations. Since 1996, Aptora has helped contractors and service businesses improve their operations through business management software, educational resources, and industry expertise. Drawing on decades of experience developing accounting and field service management solutions, our team creates straightforward guides to help business owners understand financial concepts, maintain accurate records, and make informed decisions.
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