What is a good profit margin for a freelancer or agency?

Service businesses commonly target 30-50% net margin at the project level; below 20% one bad week erases the profit. Productized or retainer work sustains the top of that range best.

Why does margin vs markup confusion cost money?

Because a client hears 'we add 20%' and you meant a 20% margin, which needs a 25% markup. Priced as markup-20 you silently gave away a fifth of your intended profit.

Should I compute margin per project or per month?

Both, different jobs: per project catches mispriced work while you can still fix the next quote; per month catches overhead creep that no single project shows.

Small business

Profit margin calculator

Margin is profit over revenue; markup is profit over cost. Mixing them up systematically underprices your work. This computes both from the same two numbers so the difference stops being abstract.

Your numbers

Currency

Revenue

What the client pays.

Total costs

Everything it took: labor, materials, subcontractors, allocated overhead.

Results

Margin (profit / revenue)40%

Profit: $4,000
Markup (profit / cost): 66.7%

Estimate

workingfigures.com/calculators/profit-margin-calculator

The formula

Profit = revenue − costs. Margin = profit ÷ revenue. Markup = profit ÷ cost. Same profit, two different percentages; contracts and targets must say which one they mean.

What this ignores

Taxes (margins are pre-tax here) and the difference between gross and net margin: put only direct costs in for gross, everything for net.

FAQ

What is a good profit margin for a freelancer or agency?: Service businesses commonly target 30-50% net margin at the project level; below 20% one bad week erases the profit. Productized or retainer work sustains the top of that range best.
Why does margin vs markup confusion cost money?: Because a client hears 'we add 20%' and you meant a 20% margin, which needs a 25% markup. Priced as markup-20 you silently gave away a fifth of your intended profit.
Should I compute margin per project or per month?: Both, different jobs: per project catches mispriced work while you can still fix the next quote; per month catches overhead creep that no single project shows.