Margin and markup answer different questions.
At $900 in entered costs and a $1,200 selling price, the modeled operating surplus is $300. That is a 25% margin on revenue, or a 33.33% markup on cost.
Margin = (price − cost) ÷ price
Markup = (price − cost) ÷ cost
Target price = cost ÷ (1 − target margin)
A 25% markup on $900 gives a price of $1,125 and a margin of 20%. Adding your target margin percentage directly to cost will therefore understate the price needed to achieve that margin.
What belongs in your entered costs?
- All paid labor, including owner-performed work, supervision and overtime where applicable.
- Employer costs associated with labor, using your actual burden assumption.
- Supplies, equipment use, allocated travel and other direct account costs.
- A deliberate share of overhead, without counting the same expense twice.
This is a model of the costs you enter. Missing insurance allocations, replacement equipment, admin time, collection losses or other expenses will overstate the result. It is not a reconciliation of your books.
Why can a good estimate lose margin?
Longer shifts, unpaid extras, changed scope and higher wages can consume the amount you expected to retain. Start with a measured cleaning scope, then revisit it using actual paid time. A low margin can be a scope problem, a production assumption problem or a price problem.
Does a target margin guarantee profit?
No. It calculates a price from your assumptions. Your actual costs, collections and commercial agreement determine the outcome.
Where does owner labor belong?
Include the cost of doing the work even if you perform it yourself. Separating compensation for work from business surplus makes the comparison more useful.
Can I keep this analysis?
SweepTally Pro provides saved scope-based estimates, backups and costing exports for $99 one time. The browser-based free calculator does not save your inputs.