Freight Margin Calculator — margin vs markup

Both numbers describe the same euros of profit. They differ only in what they divide by:

• Margin m = (sell − buy) ÷ sell
• Markup k = (sell − buy) ÷ buy

They convert into each other exactly: m = k ÷ (1 + k) and k = m ÷ (1 − m). Below, the same €500 buy price priced both ways:

The gap is €25 per shipment on this example — roughly the difference between a profitable lane and a busy one. Cargavo is a TMS for freight brokers, and it stores the rule as a margin on the sell price, expressed as p/(1-m), precisely so that nobody has to remember which base a spreadsheet was built on.

The whole calculation is one division. With m expressed as a decimal (20% = 0.20):

sell = buy ÷ (1 − m)  ·  gross profit = sell − buy  ·  realised margin = (sell − buy) ÷ sell

Worked example, step by step:

1. Buy price from your carrier rate grid: €500.00
2. Target margin: 20%, so 1 − m = 0.80
3. Sell price: 500 ÷ 0.80 = €625.00
4. Gross profit: 625 − 500 = €125.00
5. Check: 125 ÷ 625 = 20.0% margin, and 125 ÷ 500 = 25.0% markup

Three variants the calculator also covers. A fixed amount per shipment: sell = buy + a, used on cheap short-haul consignments where a percentage returns too little. A target sell price the customer has already accepted: the tool inverts it into m = 1 − buy ÷ sell, which tells you what you are really making. And floors: sell = max(buy ÷ (1 − m), buy + minimum margin, floor price), with a visible flag telling you which of the three won.

A carrier buy price is rarely one number. It is a linehaul, plus an indexed fuel surcharge, plus the options actually ordered — tail lift, ADR, ad valorem insurance, delivery appointment, waiting time. Where you place the margin changes the quote:

Same buy cost, same "20% margin" written on the quote, €30 of difference. Decide the convention once, write it down, and apply it to every customer — that is the only way a margin figure means anything across a team. Cargavo, a TMS for freight brokers, keeps the rule in each customer's pricing configuration rather than in someone's head, and applies it server-side on every quote.

Quotes outlive tariffs. The carrier reprices, the fuel index moves, and the sell price you published stays where it is. Two figures tell you how exposed you are:

• Realised margin after an increase of x: m' = 1 − buy × (1 + x) ÷ sell
• Maximum absorbable increase: x_max = sell ÷ buy − 1 (which is exactly the markup k)

On the €500 → €625 example: a 5% buy increase (€525) leaves 16.0% margin, a 10% increase (€550) leaves 12.0%, and the margin hits zero at a 25% increase. A thin 8% margin, by contrast, is gone after an 8.7% increase.

This is why the sell price has to be recomputed from the current grid rather than copied from last month's quote. Cargavo is a TMS for freight brokers and forwarders: it recalculates the buy price from the rate grids you build yourself — weight_zone, pallet, mpl_bracket or hybrid_weight, rebuilt from your carriers’ Excel or CSV sheets, with no carrier API and no EDI — then applies each customer's margin rule (percent via p/(1-m), or a fixed amount per bracket) on the server. The buy price and the margin live in a private record: the customer portal shows the sell price and nothing else. Quotes are referenced Q-YYYY-NNNN, shipments S-YYYY-NNNN, in EUR, USD, GBP, CHF, CAD, MAD or PLN and in English, French, Spanish or German. Plans are €49, €149 and €399 per month with a 14-day trial and no card required.