How freight gross margin is calculated

Add the carrier base cost and every expected surcharge to get total planned cost. Subtract that from the price you charge your customer to get gross profit. Divide gross profit by the selling price and multiply by 100 for gross margin.

Gross margin vs markup

Margin measures profit against the selling price; markup measures it against cost. On a £4,000 cost sold at £5,000, profit is £1,000: a 20% margin but a 25% markup. Quoting a markup when you meant a margin quietly underprices the job.

How unexpected costs affect profitability

Costs that appear after you quote — waiting time, detention, re-weighs, extra handling — come straight out of profit because the selling price is already fixed. The buffer figure shows how much of that you can absorb before the shipment loses money.

How to calculate a target selling price

Divide total planned cost by one minus your target margin. For a 20% margin on £4,000 of cost: £4,000 ÷ 0.80 = £5,000. Simply adding 20% to cost gives £4,800, which is only a 16.7% margin.

Why checking final freight invoices matters

A plan is only as good as the invoice that follows it. Matching each final carrier charge against what was agreed shows whether extra costs were authorised. This simulator does not check invoices — the invoice audit does.