Margin vs. Markup for Screen-Printing Quotes
Margin measures profit as a share of selling price. Markup measures profit as a share of cost. Confusing the two can make a quote miss its intended profit target.
Same profit, different denominator
If a shirt costs $6 to produce and sells for $10, the difference is $4. Margin is $4 ÷ $10 = 40%. Markup is $4 ÷ $6 = 66.67%. Neither calculation changes the dollars earned; the percentages describe those dollars relative to different bases.
Markup = (price − cost) ÷ cost
Use consistent cost boundaries. Here, “cost” means all costs allocated to the job in your estimate. A percentage calculated from blank cost alone is not comparable to a percentage calculated after labor, ink, setup, and overhead.
Why adding 40% does not give a 40% margin
Adding a 40% markup to a $6 cost gives $6 × 1.40 = $8.40. The profit is $2.40, which is 28.57% of the $8.40 selling price. To get a 40% margin, divide cost by 0.60: $6 ÷ 0.60 = $10.
| Target margin | Equivalent markup | Price for a $6 cost |
|---|---|---|
| 20% | 25% | $7.50 |
| 30% | 42.86% | $8.58 |
| 40% | 66.67% | $10.00 |
| 50% | 100% | $12.00 |
These targets illustrate the arithmetic. They are not recommended margins for a printing business. Your required margin depends on the expenses included in cost and your business objectives.
Apply the difference to a 100-shirt quote
At $6 cost per finished shirt, a 100-shirt job costs $600. A 40% margin requires a $1,000 quote. A 40% markup produces an $840 quote. The $160 difference is not caused by a calculator error; it comes from choosing a different denominator.
In the screen-printing pricing calculator, the target percentage is margin. The unit price is rounded up to the next cent, then multiplied by finished quantity. This may produce an achieved margin slightly above the requested target.
Check discounts against profit, not just revenue
Suppose the $10 selling price is discounted by 10% to $9, with the $6 cost unchanged. Profit per shirt falls from $4 to $3: a 25% reduction in profit for a 10% price reduction. The new margin is $3 ÷ $9 = 33.33%.
Quantity discounts can still make sense when setup cost is spread across more shirts or unit costs change. Recalculate the order with those actual changes instead of applying a percentage discount to an old quote automatically. The break-even calculator can compare quantity and contribution at a specific selling price.
Before using a target percentage
- Write down whether the target is margin or markup.
- Include each cost once: blanks, ink, preparation, production labor, and allocated overhead.
- Separate estimated job profit from the business’s final net profit.
- Recheck the calculation after discounts or scope changes.
All numbers here are constructed examples derived from the displayed formulas. Use the screen-printing quote checklist to define the job before applying a margin.
Apply the percentage to the right cost base
Before choosing a margin, check how you allocated overhead. Then use the quantity-pricing comparison to see how spreading setup changes the unit cost. A lower unit price needs a revised calculation, not just a familiar percentage.
Margin or markup: record the denominator
Copy these fields into the record for your next comparable job.
- Cost boundary
- List the expenses included in unit cost; use that same list for both percentages.
- Target and quote
- Record cost, selling price, and whether the target divides profit by cost or revenue.
- Discount decision
- After a discount, recalculate profit divided by the new revenue; do not keep the old percentage.
Put this into practice
Open the job pricing calculator with your own job values.
AI-assisted educational content. Examples are illustrative; arithmetic is checked against the stated methods. This is not a field-tested production specification. Read our editorial policy.
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