Parts markup and margin
Markup is the profit on a part as a percentage of what the part cost. Margin is the same profit as a percentage of what the part sold for. The dollars are identical; the percentages are not, and margin is always the smaller.
A part bought for $60 and sold for $90 made $30. Over the cost, that is 50%; over the price, 33.3%. Vendors, pay plans and accountants use both words, and a shop that confuses them sets its matrix wrong by a third. PartsTech's 2024 post on matrix mistakes puts the relationship in one line: the markup is the tool, the margin is the goal, and a matrix is built to hit a targeted overall margin.
Markup % = (price − cost) ÷ cost × 100
Margin % = (price − cost) ÷ price × 100
To go from one to the other:
Margin % = markup ÷ (100 + markup) × 100, and markup % = margin ÷ (100 − margin) × 100
A markup of 100% is a margin of 50%, and no markup, however large, reaches a 100% margin. As examples only: 25% markup is 20% margin; 40% markup is 28.6% margin; 150% markup is 60% margin.
A parts matrix is written in markup because it starts from cost; a profit-and-loss statement reads in margin because it starts from sales. The parts and labor matrix calculator shows both for each bracket.
Sources (1)
- Common mistakes when using a parts markup matrix in your auto shop · PartsTech · read November 4, 2026