Contractor Markup Calculator

Markup and margin are not the same number

Markup is profit as a percentage of your cost. Margin is profit as a percentage of the price you charge. The same job has both, and they only match at zero. Quote on markup while judging yourself on margin and the gap quietly eats your profit.

• Price = Cost × (1 + Markup)
• Margin = Markup ÷ (1 + Markup)
• Markup = Margin ÷ (1 - Margin)

Markup to margin, at a glance

• 10% markup = 9.1% margin
• 15% markup = 13.0% margin
• 20% markup = 16.7% margin
• 25% markup = 20.0% margin
• 30% markup = 23.1% margin
• 40% markup = 28.6% margin
• 50% markup = 33.3% margin
• 100% markup = 50.0% margin

What markup do you need for the margin you want?

Work backwards from the margin. To keep a 20% margin you need a 25% markup on cost. For 25% margin it is 33.3%. For 30% margin it is 42.9%. A common mistake is to see a 30% margin target and add 30% to your costs, which actually delivers a 23.1% margin.

Worked example

A job costs you $10,000 all-in. At 25% markup you quote $12,500 and keep $2,500, which is a 20% margin. If you needed a 25% margin you should have quoted $13,333, a 33.3% markup. The $833 difference is what the wrong formula costs you on one modest job.

Use fully loaded cost

Markup only works on a real cost number. Include labor with payroll taxes and workers comp, subs, materials, equipment and your share of overhead. If overhead is left out, a healthy-looking markup can still lose money once the bills are paid.