Agencies mark up costs they front for clients — stock images, ad spend, printing. Multiply the cost by one plus the markup for the client price, and the markup itself is your margin on the pass-through.
The example
$500 cost + 20% markup.
| A | B | |
|---|---|---|
| 1 | Item | Value |
| 2 | Cost | 500 |
| 3 | × 1.20 | → $600 |
The formula
The formula:
How it works
How it works:
- Multiply your actual cost by
(1 + markup_percent)for the client price. - The markup amount —
cost × markup_percent— is your margin for handling and risk. - A 15–20% markup is common for managing third-party costs.
- Disclose markups per your client agreement — some contracts require pass-through at cost.
Markup vs commission on ad spend. For media buying, agencies often charge a percentage of spend rather than a markup on cost — functionally similar but contractually different. And many clients require pass-throughs billed at cost with the fee charged separately. Always match the method to what the agreement allows.
Try it: interactive demo
Cost and markup %.
Variations
Markup amount
Your margin:
Commission on spend
Media model:
Total invoice
Costs + fee:
Pitfalls & errors
Markup vs margin. A 20% markup on cost is not a 20% margin on price — see the margin-vs-markup recipe.
Disclose per contract. Some agreements require pass-through at cost.
Percent as decimal. 20% is 0.20 in the formula.
Practice workbook
Frequently asked questions
How do I mark up a pass-through cost in Excel?
What's the markup amount itself?
Is markup on cost the same as margin?
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