Cleaning margin versus markup: a pricing worksheet

Use the right denominator when turning cleaning costs into a quote. Margin is profit divided by selling price; markup is profit divided by cost.

A situation to work through
With a cost of $120, a 25% markup gives a $150 price and a 20% margin. A 25% margin requires a $160 price: 120 divided by 0.75.

Work through the decision
Add labor, supplies and the chosen overhead allocation to get cost. For target margin m, divide cost by 1 minus m. Check the result by subtracting cost from price and dividing that profit by price. Write the percentage as a decimal during calculation.

Before you hand over the result
This worksheet does not choose a market price for you. Check costs and scope before using the calculated number in a proposal.

Worksheet

Labor cost
____________________________

Supplies
____________________________

Overhead allocation
____________________________

Total cost
____________________________

Target margin
____________________________

Calculated price
____________________________

Acceptance check
For $120 cost and a 25% margin, price is $160 and profit is $40. The check is 40 divided by 160 equals 25%.

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