2 min tool
Work out the selling price, profit and margin on parts before adding them to an invoice.
Cost price £30.00 with 30% markup gives a selling price of £39.00, gross profit of £9.00 and a gross margin of about 23.1%.
Cost
£30.00
Markup
30%
Sell price
£39.00
Profit
£9.00
Most workshops add a markup to parts, but doing the maths on a phone while building an invoice is slow and easy to get wrong.
Use this calculator to turn a cost price into a sensible invoice price. VAT is kept separate because VAT is not your profit.
Mechanics Hub can store stock cost, invoice price and profit snapshots so you do not need a separate calculator for every job.
Enter what the part cost you, the markup percentage you want to add and how many are going on the job. The calculator shows the price per unit to put on the invoice, the total for the line, your gross profit and your gross margin.
Use your cost excluding VAT if your garage is VAT registered, because you reclaim the VAT you paid the motor factor. At the 20% standard rate, divide a VAT-inclusive trade price by 1.2 to get the net cost. If you are not VAT registered, the VAT you paid is a real cost to you, so enter the price you actually paid.
Selling price = cost × (1 + markup ÷ 100). Gross profit = selling price − cost. Gross margin = gross profit ÷ selling price × 100.
Markup is measured against cost and margin against the selling price, so the margin is always the smaller number. To hit a margin target, convert it first: markup = margin ÷ (1 − margin). A 25% margin needs a 33.3% markup, and a 30% margin needs about 42.9%.
| Markup | Price on a £30 part | Gross profit | Gross margin |
|---|---|---|---|
| 20% | £36.00 | £6.00 | 16.7% |
| 25% | £37.50 | £7.50 | 20.0% |
| 30% | £39.00 | £9.00 | 23.1% |
| 40% | £42.00 | £12.00 | 28.6% |
| 50% | £45.00 | £15.00 | 33.3% |
| 100% | £60.00 | £30.00 | 50.0% |
A pair of front discs costs £62 from the factor and a set of pads £28, both excluding VAT. At a 35% markup the discs go on the invoice at £83.70 and the pads at £37.80.
That is £121.50 of parts, £31.50 gross profit and a 25.9% margin. If you are VAT registered, VAT at 20% is then added to the invoice total. It is passed on to HMRC, so it does not change your profit.
One flat percentage rarely suits every part. A cheap bulb earns pennies for the same ordering time as an expensive part, while a big percentage on a costly part is the line customers question. That is why many garages use a sliding scale, covered in our parts markup guide.
No. Markup is added on top of cost. Margin is profit as a percentage of the selling price. A 30% markup on a £30 part gives a £39 selling price, £9 profit and roughly 23.1% margin.
No. VAT collected from the customer is not business income. Profit and margin should normally be calculated on the price excluding VAT.
You can, but labour is usually better treated as a separate labour rate or service item. Parts markup is most useful when the business buys a physical part and resells it.
Take the profit, divide it by the cost and multiply by 100. A part bought for £40 and sold for £52 has £12 profit, so the markup is 12 ÷ 40 × 100 = 30%. The margin on the same sale is 12 ÷ 52 × 100, about 23.1%.
There is no fixed rule. Many garages use a higher percentage on cheap parts and a lower one on expensive parts, so small items are worth handling and big items stay competitive. Work out what parts need to contribute alongside your labour rate, then set bands you apply to every customer.