Margin and markup answer different questions. Confusing them can leave a cleaning quote below the target you thought you were setting.
Start by deciding which costs are included in your calculation. In the MaidBench model, the costs can include a working wage for the owner, additional employer costs, paid travel, supplies, direct job costs, allocated overhead, and payment fees. A margin based on fewer costs is a different measure.
Margin uses revenue as the denominator
If a visit earns $200 and the costs included in your model total $150, the modeled profit is $50. Margin divides that $50 by the $200 revenue.
$50 ÷ $200 = 25%
That means 25 cents of each revenue dollar remains after the included costs. It does not automatically mean after-tax income or cash available to withdraw. Costs not entered in the model are not reflected in the result.
Markup uses cost as the denominator
Using the same $150 cost and $200 price, markup divides the $50 difference by the cost.
$50 ÷ $150 ≈ 33.3%
The same price therefore has a 25% margin and a 33.3% markup. Neither figure is contradictory. They use different denominators.
Why a 25% markup produces a 20% margin
Suppose the modeled cost is $100 and you add a 25% markup. The price becomes $125, leaving $25 above cost. The margin is $25 divided by $125, which is 20%.
| Calculation | Result |
|---|---|
| Cost | $100.00 |
| 25% markup on cost | $25.00 |
| Price | $125.00 |
| Margin: $25 ÷ $125 | 20.0% |
To achieve a 25% margin before any additional payment fees, divide the cost by 1 minus the margin: $100 ÷ 0.75 = $133.33 recurring. Rounding upward to $133.34 avoids falling just below the target because of cents.
Percentage payment fees change the price formula
If the payment provider charges a percentage of the customer price, that fee also grows when the price grows. Adding the fee percentage to the cost as though it were a markup does not solve the same equation.
For a $100 pre-fee cost, a 25% margin target, a 2.9% example fee rate, and a $0.30 fixed fee, the planning floor is about $139.12, rounded upward to cents. Your actual provider’s fees may differ. A rounding increment can give you a simpler customer-facing number above that floor.
Use consistent definitions when comparing customers
A customer can have an attractive margin before owner pay and a much lower margin after it. A comparison is meaningful only when visits use consistent cost categories and allocation assumptions.
Keep the labels explicit: “profit after entered costs” tells you more than an unlabeled “profit.” Record the costs after the work, then check whether the original time estimate was accurate. A higher price cannot compensate for every missed cost or unpriced change in scope.
When revenue is zero, a margin percentage is undefined. The workbook and calculator show “n.a.” instead of dividing by zero. A negative dollar result can still be meaningful if costs were incurred without revenue.