Markup vs Margin Calculator
The most common pricing mistake contractors make is confusing markup with margin. A 20% markup is NOT the same as a 20% profit margin. This calculator shows you the difference and helps you price jobs correctly.
The #1 Contractor Pricing Mistake
If your job costs you $10,000 and you add a 20% markup, your selling price is $12,000 — but your profit margin is only 16.7%, not 20%. Confusing the two can cost you thousands per year.
Materials + labor + overhead
Results
Selling Price
$1,200.00
Gross Profit
$200.00
Actual Profit Margin
16.67%
NOT 20%
Translation: A 20% markup on $1,000 gives you a selling price of $1,200.00 and a profit of $200.00. Your actual profit margin is 16.7%, not 20%.
Markup vs Margin Reference Table
| Markup % | Profit Margin % | Price on $10,000 Job | Profit |
|---|---|---|---|
| 10% | 9.09% | $11,000 | $1,000 |
| 15% | 13.04% | $11,500 | $1,500 |
| 20% | 16.67% | $12,000 | $2,000 |
| 25% | 20.00% | $12,500 | $2,500 |
| 30% | 23.08% | $13,000 | $3,000 |
| 33.33% | 25.00% | $13,333 | $3,333 |
| 40% | 28.57% | $14,000 | $4,000 |
| 50% | 33.33% | $15,000 | $5,000 |
| 75% | 42.86% | $17,500 | $7,500 |
| 100% | 50.00% | $20,000 | $10,000 |
Based on a $10,000 job cost. Notice: a 50% markup only gives you a 33% margin. To get a true 50% margin, you need a 100% markup.
Common Contractor Margins by Trade
These are NET margins after all overhead. Your MARKUP needs to be higher than these numbers to achieve these margins. Use the calculator above to find the right markup for your target margin.
Key Takeaways
- Markupis calculated on your cost: (Profit / Cost) × 100
- Marginis calculated on the selling price: (Profit / Selling Price) × 100
- Markup is always a higher number than margin for the same profit
- Most contractors target 10-20% net profit margin, which requires a 11-25% markup before overhead
- If you want a 20% margin, you need a 25% markup — not 20%
How to Use This Calculator
Choose a calculation mode: enter your cost and markup percentage to get a selling price, convert between markup and margin percentages, or use the Job Pricing Worksheet to price a full job from your actual costs.
Formula Used
Markup% = (Profit / Cost) × 100. Margin% = (Profit / Selling Price) × 100. Selling Price = Cost × (1 + Markup% / 100). Markup% = Margin% / (100% − Margin%) × 100. Margin% = Markup% / (100% + Markup%) × 100.
Related Business Calculators
Want software that handles estimates, invoicing, and scheduling so you can focus on growing your business? Find the right tool for your trade and team size.
Need to figure out what to charge?
All 10 pricing formulas + 18-trade margin benchmarks.
Contractor Pricing Formulas Cheatsheet→Starting or growing your contracting business?
Our free startup guide covers licensing, LLC formation, insurance, pricing, and getting your first customers.
How to Start a Contracting Business→Free Software Guide for Business Professionals
Get our free guide comparing the best software tools for business businesses — with real pricing and honest recommendations.
No spam. Unsubscribe anytime.
Disclaimer
This calculator is for estimation purposes only. Results may vary based on local conditions, materials, and building codes. Always consult a licensed professional before making decisions based on these calculations. MyContractorTools is not responsible for any errors or omissions.