Margin vs markup in cleaning bids
Adding 20% to your cost does not give you a 20% margin.
The formulas
Markup price = cost x (1 + markup). Margin price = cost / (1 - margin). Margin is profit as a share of the price; markup is profit as a share of cost.
| Monthly cost | +20% markup | Real margin | 20% margin price |
|---|---|---|---|
| $1,500 | $1,800 | 16.7% | $1,875 |
| $2,000 | $2,400 | 16.7% | $2,500 |
| $4,000 | $4,800 | 16.7% | $5,000 |
Why it matters for cleaning
Cleaning contracts run month after month. A margin gap of a few points on every contract is real money across a year, and it is the cushion for sick days, re-cleans and supply price rises.
Check after rounding
If you round the monthly price, recompute the margin: (price - cost) / price. Our spreadsheet does this automatically and also shows your effective billed rate per labour hour.
Run your numbers in the free calculator or get the full Bid Kit.