Markups and Margins

Markup is the difference between the contract price of a product and its cost (excluding GST or VAT). It is expressed as a percentage above the cost or a fixed number above the costs.

Markup is the contract price minus the costs.

In other words, markup is the amount you add to the cost to get to the selling price (ex GST).

Examples of markups

Let’s suppose the cost to build a house is $300,000. To calculate the contract price, you add some markups to the cost like:

  • Profit (15%): $45,000
  • Sales Commission (8%): $24,000
  • Admin (2%): $6,000
  • Contingency (1.5%): $4,500

Total markups would be: $79,500

GST (or VAT) will be on top of the costs and markups: ($300,000 + $79,500) * 10% = $37,950

So, the contract price can be calculated as Costs + Markups + GST = $300,000 + $79,500 + $37,950 = $417,450

Markups in Breinz

Doing the above math in Breinz is easy. You just need to add any markup you think you want to add on top of your costs in Markup tab.

Go to Projects page, select the project, select the costing you want to add margins for, and click on Markups tab.

  1. Add a new Markup.
  2. Copy all markups to use in a different costing.
  3. Paste copied markups.
  4. Delete all markups.
  5. Edit an existing markup
  6. Switch on/off a markup to check it's effect on the price.
  7. Markup value: Markup percentage * Total costs

Add a new markup

  1. Click on the plus button to add a new markup
  2. Give the new markup a name, like Profit.
  3. Select the type: a markup can be a fixed figure you want to add on top of the costs, like $50,000, or a percentage of the costs.
  4. Type the amount of the markup
  5. Click on Add New

Markup Calculations

  1. Set Markups: shows the total percentage and the total value of the markups, and the total costs + the total markups on the last column
  2. Expected Markups: You can turn off the margin on some of the items. In other words, you can have some items in your costing the the markups don't affect them. In this case, the markups you are going the expect on your costing would be different from the overall markups you set for the costing. You might like to ignore the margin on building the pool for the house, as the client is going to pay for it directly.
  3. Set GST: GST (or VAT) is the tax going to be collected from the client and payable to the tax office. This can be set for the Project, not the Costing in the Project Settings tab.
  4. GST Payable: similar to Expected Margins, you can turn off the GST of some items in your costing. This figure shows the exact GST you set to pay for the Costing.
  5. Total: This figure is the sum of the Total Costs + Margins + GST. This can be your Contract Price.
  6. Contract Price is the amount you set in the Costing Settings tab, if different from figure calculated in line 5.