This is the most expensive arithmetic mistake in the trades and almost nobody notices they are making it.
A painter figures the job costs two thousand in paint and labor. He adds fifty percent. Quotes three thousand. In his head, he made fifty percent.
He made a thousand dollars on a three thousand dollar job. That is a thirty-three percent margin, not fifty.
Every job. For years.
Why it matters more than it sounds
If you set your overhead, your slow-season cushion and your own pay based on a margin you are not actually earning, the shortfall shows up somewhere. Usually in a winter where the work slowed down and there was less put away than expected.
And the gap grows with the percentage. A twenty-five percent markup is a twenty percent margin, which is close enough to feel harmless. A hundred percent markup is a fifty percent margin. The bigger the number you thought you were earning, the further off you were.
Convert markup to margin, and back
Put in the markup you have been adding and see the margin it actually produces. Then work backwards from the margin you need to the markup that gets you there.
What to convert
The conversion
The cheat sheet. Tape it to the wall.
| If you want this margin | Add this markup | Price on $100.00 |
|---|---|---|
| 20% | 25% | $125.00 |
| 25% | 33% | $133.33 |
| 30% | 43% | $142.86 |
| 35% | 54% | $153.85 |
| 40% | 67% | $166.67 |
| 45% | 82% | $181.82 |
| 50% | 100% | $200.00 |
| 55% | 122% | $222.22 |
| 60% | 150% | $250.00 |
Margin is a slice of the price. Markup is added on top of the cost. They will never be the same number.
What this assumed
- Markup is measured on cost. Margin is measured on the selling price. They are never the same number.
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How to run it, step by step
- 1Start with your true job cost. Paint, sundries, sprayer wear, masking, labor at the loaded rate, and the drive. This is the number the markup gets applied to, so if it is wrong nothing after it can be right.
- 2Put in the markup you currently add. Whatever you have been doing. Fifty percent, a third, double the material. Whatever it is, put in the real one, not the one you meant to use.
- 3Read the margin it actually produces. This is the moment most painters find the gap. A fifty percent markup does not produce a fifty percent margin. It never has.
- 4Work backwards from the margin you need. Decide the margin the business has to make to cover overhead and slow months, then take the markup the tool gives you and use that number on every quote.
How to read what it gives you
- Markup is on cost. Margin is on price. They are different numbers and the difference grows as the percentage grows, which is why it bites hardest on your biggest jobs.
- If you have been quoting on markup and thinking in margin, you have been earning less than you believed on every single job for as long as you have been doing it.
- Once you know the markup that produces the margin you need, it becomes one number you apply every time instead of a decision you make while the customer watches.
The tool is free, it does not expire, and you can put it on your own website if you want it there. Nothing on this page is locked.
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The order to do this in
One. Get your true cost right. Everything after this is built on it. Paint, sundries, tape, plastic, sprayer tips, equipment wear, labor at what it actually costs you including taxes and insurance, and the drive.
Most painters underestimate labor because they price it at what they pay the crew rather than what the crew costs the business.
Two. Decide the margin the business needs. Not wants. Needs. Enough to cover overhead across the year including the months where nobody is painting anything, plus your pay, plus something for the truck when it dies.
Three. Convert that margin into a markup. Now you have one number that goes on every quote. No decision to make in front of the customer, no negotiating with yourself.
Where painters lose the margin they set
The extra coat. It was not in the quote. It went on anyway. Put an allowance in or put it in writing that it is extra.
Prep that was worse than the walk-through. Old wallpaper, damage under the paint, surfaces that need more than a scuff. Your estimate should say plainly that the price assumes normal prep and that anything beyond it gets quoted before it starts.
The friendly discount. The last five percent given away at the end of a conversation comes straight off the margin, not off the price. On a thirty percent margin, giving away five percent of the price is giving away a sixth of your profit.
Change orders that never got written. They asked for the trim too. You said sure. Write it down and price it, every time.
The one number to leave with
Work out the markup that produces the margin you need, write it on something you will see, and use it on every quote from tomorrow.
It is the cheapest raise in the business, because nothing about the work has to change.
Questions people actually ask
What is the actual difference?
Markup is calculated on what the job cost you. Margin is calculated on what you charged. A hundred dollar cost marked up fifty percent is a hundred and fifty dollar price, and the fifty dollars of profit is a third of that price, not half. So a fifty percent markup is a thirty-three percent margin.
Which should I quote from?
Quote from markup, because it is applied to a number you know at quoting time. Manage the business on margin, because that is what actually pays overhead. The converter is how you keep the two honest with each other.
What margin should a painting business run at?
There is no universal answer, and anybody quoting you one without knowing your overhead, your crew structure and your market is guessing. Work out what your overhead and your own pay require, then set the margin that covers it.
Does this apply to material and labor differently?
Many painters mark them up at different rates, and that is fine. Just run each through the same conversion so you know the blended margin on the job rather than assuming it.