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.
CLEANING OPERATIONS GUIDE
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.
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.
Your working worksheet
Download the text file and fill it in with your own service details. Keep it with the relevant job record.
- Labor cost
- Supplies
- Overhead allocation
- Total cost
- Target margin
- Calculated price
Check the result
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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