Which should I quote a client — markup or margin?

Whichever your agreement defines, stated in writing with the formula. Cost-plus contracts are normally written as a markup on net cost because that is the number the client can verify against invoices. Margin is the figure you manage the business by, not usually the one you contract on.

Can margin ever exceed 100%?

No. Margin is a share of the selling price, so it approaches 100% but never reaches it. Markup has no ceiling — a 300% markup is a 75% margin — which is why the two numbers diverge so far at the top of the table.

What margin should an interior designer aim for?

We do not publish a benchmark, because we have no survey we can source and date. What the calculator does instead is show what a given markup actually yields after freight and receiving, so you can compare it against your own overhead rather than against a number from a blog.

DefinitionUpdated July 31, 20262 min read

Markup vs margin: the same money, two different percentages

Markup is measured against your cost, margin against the client price — so a 40% markup is a 28.6% margin. The formulas, a full conversion table, and the mistake that costs designers a third of the profit they thought they had.

By Idan Mann, founder of NYA

The short answer

Markup is profit as a percentage of your cost; margin is the same profit as a percentage of the price the client pays. Because the price is the larger number, the margin is always the smaller percentage: a 40% markup is a 28.6% gross margin. Margin equals markup ÷ (1 + markup).

This is the single most expensive piece of arithmetic in a design business, because the two words are used interchangeably by people who mean different things. A designer who prices at "40%" believing they keep 40 cents of every dollar the client spends is short by roughly a third of the profit they think they made.

The two formulas

Markup % = (client price − cost) ÷ cost × 100
Margin % = (client price − cost) ÷ client price × 100
Margin from markup: margin = markup ÷ (1 + markup)
Markup from margin: markup = margin ÷ (1 − margin)

Worked once: a chair costs you $1,000 and you sell it at $1,400. The profit is $400. Against cost that is a 40% markup; against the $1,400 the client paid it is a 28.6% margin. Same $400 either way — only the denominator changed.

Markup to margin, converted

Markup on cost	Multiplier	Gross margin
15%	1.15×	13.0%
20%	1.20×	16.7%
25%	1.25×	20.0%
30%	1.30×	23.1%
33.3%	1.33×	25.0%
35%	1.35×	25.9%
40%	1.40×	28.6%
50%	1.50×	33.3%
66.7%	1.67×	40.0%
75%	1.75×	42.9%
100% (keystone)	2.00×	50.0%
150%	2.50×	60.0%

Read it the other way to answer the more useful question: to keep a 40% margin you must apply a 66.7% markup.

Freight and receiving passed through at cost dilute margin without touching markup. If you mark up goods at 35% and hand the client a $500 freight bill at cost, your margin on the transaction is lower than the table says — the markup calculator models exactly that case.

Common questions

Which should I quote a client — markup or margin?: Whichever your agreement defines, stated in writing with the formula. Cost-plus contracts are normally written as a markup on net cost because that is the number the client can verify against invoices. Margin is the figure you manage the business by, not usually the one you contract on.
Can margin ever exceed 100%?: No. Margin is a share of the selling price, so it approaches 100% but never reaches it. Markup has no ceiling — a 300% markup is a 75% margin — which is why the two numbers diverge so far at the top of the table.
What margin should an interior designer aim for?: We do not publish a benchmark, because we have no survey we can source and date. What the calculator does instead is show what a given markup actually yields after freight and receiving, so you can compare it against your own overhead rather than against a number from a blog.

Keep reading

Markup vs margin: the same money, two different percentages

By Idan Mann, founder of NYA

The short answer

The two formulas

Markup % = (client price − cost) ÷ cost × 100

Margin % = (client price − cost) ÷ client price × 100

Margin from markup: margin = markup ÷ (1 + markup)

Markup from margin: markup = margin ÷ (1 − margin)

Markup to margin, converted

Markup on cost	Multiplier	Gross margin
15%	1.15×	13.0%
20%	1.20×	16.7%
25%	1.25×	20.0%
30%	1.30×	23.1%
33.3%	1.33×	25.0%
35%	1.35×	25.9%
40%	1.40×	28.6%
50%	1.50×	33.3%
66.7%	1.67×	40.0%
75%	1.75×	42.9%
100% (keystone)	2.00×	50.0%
150%	2.50×	60.0%

Read it the other way to answer the more useful question: to keep a 40% margin you must apply a 66.7% markup.

Common questions

Which should I quote a client — markup or margin?: Whichever your agreement defines, stated in writing with the formula. Cost-plus contracts are normally written as a markup on net cost because that is the number the client can verify against invoices. Margin is the figure you manage the business by, not usually the one you contract on.
Can margin ever exceed 100%?: No. Margin is a share of the selling price, so it approaches 100% but never reaches it. Markup has no ceiling — a 300% markup is a 75% margin — which is why the two numbers diverge so far at the top of the table.
What margin should an interior designer aim for?: We do not publish a benchmark, because we have no survey we can source and date. What the calculator does instead is show what a given markup actually yields after freight and receiving, so you can compare it against your own overhead rather than against a number from a blog.