Freight margin calculator
Turn a carrier cost and a markup or target margin into a freight price. See the markup, margin and dollar profit, ex and inc GST.
Your numbers
The numbers filled in are examples. Replace them with your own.
Results
- Markup
- 25.00%
- Margin
- 20.00%
- Profit, ex GST
- $25.00
| Amount | Ex GST | Inc GST |
|---|---|---|
| Carrier cost | $100.00 | $110.00 |
| Price | $125.00 | $137.50 |
| Profit | $25.00 | $27.50 |
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Why markup and margin are different
Markup and margin describe the same dollars of profit, measured against different things. Markup is profit as a percentage of what the freight cost you. Margin is profit as a percentage of what you charged for it.
The price is always bigger than the cost, so the same profit is always a smaller percentage of the price. That is why a margin is always lower than the markup that produced it, and why setting a markup equal to the margin you want leaves you short.
Forensik sets freight prices as a markup on cost. If you think in margin, enter your target here and the calculator shows the markup that gets you there.
Worked example, with example numbers
Example numbers: a carrier cost of $100.00 ex GST and an example markup of 25%.
The price is $125.00 ex GST and the profit is $25.00. That profit is 25.00% of the cost (the markup) and 20.00% of the price (the margin).
To reach a margin of 25% instead, the price has to be $133.33 ex GST, which is a markup of 33.33%.
Questions
- What is the difference between markup and margin?
- Markup is profit divided by cost. Margin is profit divided by price. They use the same profit, but the price is bigger than the cost, so the margin is always the lower number.
- How do I convert a target margin to a markup?
- Divide the cost by (1 - margin) to get the price. For example, a target margin of 25% means dividing the cost by 0.75. The markup is then the profit divided by the cost.
- Why can't I enter a target margin of 100%?
- Margin is profit as a share of the price, and a margin of 100% would mean the freight cost you nothing. As the target gets close to 100%, the price it needs grows very quickly.
- What should I count as the carrier cost?
- Everything you expect the carrier to bill for the delivery: base freight, the fuel levy and any expected surcharges, ex GST. Leave one out and the real margin is lower than the one shown here.
- Should I look at profit ex GST or inc GST?
- Both are shown, but if your business is registered for GST the ex GST figure is the one to judge by, because the GST in the inc GST figure is not yours to keep. Markup and margin are worked out on the ex GST amounts. Your accountant can confirm how this applies to you.
More in Freight profit and margin
See where your freight margin goes
Forensik prices every shipment from your own rate cards and checks every carrier invoice line against them.