# About Estimated Profit Margin / Markup Percent

When you create budget for SM agreements, the system calculates estimated profit margin and percent markup values for the agreement.

The Est. Profit Margin and Est. Percent Markup fields on the SM Agreements form are only populated when you set up a budget for the agreement.The system uses the budget total in conjunction with the agreement price and the estimated service revenue to determine the estimated profit and markup amounts.

Once you set up the budget, the sum of all budget entries becomes the Budget Total. The system then calculates the estimated profit margin as follows:

(Agreement Price + Est. Service Revenue) – Budget Total / (Agreement Price + Est. Service Revenue)

The estimated percent markup is calculated as:

(Agreement Price + Service Revenue – Budget) / Budget

Changes to the estimated profit margin and markup percents can only be made by adding/deleting budget entries, changing the agreement price, or adding/deleting service revenue prior to activating the agreement.