Markup vs margin calculator for contractors
Markup and margin are not the same number, and mixing them up is one of the most common ways a small contractor under-prices a job. Markup is profit as a share of your cost. Margin is profit as a share of the price you charge. A 25 percent markup is only a 20 percent margin.
Enter your cost and either the markup you want or the margin you want. You get the selling price, the profit in dollars, and the other percentage so you can compare them.
How the math works
- Price from markup: cost multiplied by one plus the markup.
- Price from margin: cost divided by one minus the margin.
- Profit is price minus cost.
- Markup is profit divided by cost. Margin is profit divided by price.
Worked example
A job costs 1,000. A 25 percent markup gives a price of 1,250 and a profit of 250, which is a 20 percent margin. To earn a 30 percent margin on the same cost, the price must be 1,428.57, which is a markup of about 42.86 percent.
Questions people ask
Which one should I price with?
Margin tells you how much of every dollar you bring in is profit, so many owners price with margin. Markup is quicker to apply to a cost sheet. Use either, but never copy a margin number into a markup field.
Does this include overhead?
No. Enter your full cost, including labor, materials and your share of overhead, as the cost.
Why is margin always lower than markup?
Profit is divided by the larger number, the price, so the percentage is smaller.
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Estimates only. Built with AI assistance and checked with automated tests. Not tax, legal, financial or engineering advice.