A bid’s profit margin is price minus all costs, over price. Pricing from a target margin — cost divided by (1 − margin) — guarantees the markup instead of guessing.
The example
$120 cost, 40% target margin.
| A | B | |
|---|---|---|
| 1 | Item | Value |
| 2 | 120 / 0.60 | — |
| 3 | Bid price | → $200 |
The formula
The formula:
How it works
How it works:
- Total the cost: burdened labor + supplies + allocated overhead.
- Divide by (1 − target margin) for the price that yields that margin.
- Margin % = (price − cost) ÷ price — check it after.
- Don’t confuse margin and markup: a 40% margin is a 67% markup on cost.
Margin and markup are not the same — pricing on the wrong one loses money. A 40% margin means cost is 60% of price (divide by 0.60). A 40% markup means price is cost × 1.40 — only a 28.6% margin. Cleaners who “add 40%” thinking they’re getting a 40% margin quietly under-price every job. Price from margin with cost ÷ (1 − margin) and the markup takes care of itself.
Try it: interactive demo
Total cost and target margin.
Variations
Margin on a set price
Check it:
Markup equivalent
On cost:
Profit dollars
Price − cost:
Pitfalls & errors
Margin ≠ markup. Price from margin: cost ÷ (1 − margin).
All costs. Burdened labor + supplies + overhead, not just labor.
Margin of 100%. Dividing by zero (margin=1) errors.
Practice workbook
Frequently asked questions
How do I price a cleaning bid for a target margin in Excel?
What's the difference between margin and markup?
How do I check my margin?
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