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Markup vs margin calculator
A 25% markup is not a 25% profit. Put your usual markup in the yellow cell and see what it really leaves you — then work backwards from the margin you actually want.
Gross profit, before overhead. Your truck, insurance, phone and unbilled office time still come out of that number.
Why the two numbers differ
Markup is measured against your cost. Margin is measured against your price. Same dollars, different denominator — and the denominator is bigger, so the margin number is always the smaller one.
The arithmetic is short. Margin = markup ÷ (100 + markup). A 25% markup is 25 ÷ 125, which is 20%. A 50% markup is 50 ÷ 150, which is 33.3%. To go the other way, markup = margin ÷ (100 − margin), so a 40% margin needs a 67% markup.
This is where a year of profit quietly disappears. A contractor who believes he is running at 25% and needs 20% to cover overhead is actually running at 20% and covering nothing. He finds out in February, from his accountant.
The conversion table, if you'd rather just read it
| You mark up | Your actual margin | Gross profit on a $10,000 price |
|---|---|---|
| 10% | 9.1% | $909 |
| 15% | 13.0% | $1,304 |
| 20% | 16.7% | $1,667 |
| 25% | 20.0% | $2,000 |
| 30% | 23.1% | $2,308 |
| 35% | 25.9% | $2,593 |
| 40% | 28.6% | $2,857 |
| 50% | 33.3% | $3,333 |
| 60% | 37.5% | $3,750 |
| 75% | 42.9% | $4,286 |
| 100% | 50.0% | $5,000 |
Tape it inside the cover of your quote binder, or run the numbers above against a job you finished last month. The second one usually stings more.
What margin should you be aiming for?
There's no universal number, but the shape is consistent. Gross margin has to cover overhead first, and whatever is left is net profit. If your overhead runs $18 per billable hour and you bill 1,400 hours a year, that's roughly $25,000 to clear before you have earned a dollar.
Work it in this order: find your true labour cost, find your overhead per hour, then set a margin on top of both. The loaded labour rate calculator and the overhead per billable hour calculator do the first two steps, and the hourly rate calculator puts them together.
Questions contractors actually ask
Is a 20% markup the same as a 20% margin?
No. A 20% markup produces a 16.7% margin. The markup is calculated on your cost; the margin is calculated on the price the customer pays, which is the larger number.
What markup do most contractors use?
Gut-feel markups of 10–30% are common, which is exactly the problem — they produce 9–23% gross margins, and overhead alone often eats more than that. What matters is the margin you need after your own overhead, not what the last guy charged.
Does this handle materials and labour differently?
This calculator works on the whole job. Many trades apply a heavier markup to materials than to labour hours, because materials carry handling, delivery and warranty risk. The pricing calculator in the Vault splits them out per line.
Should I mark up subcontractors?
Yes. You carry the scheduling, the supervision, the deficiency callbacks and the payment risk. A 10–20% markup on subbed work is normal and it is not padding.
The calculator that does this on every line of the job
Quote Before Dark's pricing calculator carries your loaded labour rate and overhead into every quote automatically, then shows the break-even floor next to your target-margin price — so you never have to remember which number is which.
Pricing calculator, 10 trade estimate templates in Word, pre-written exclusions and terms, and the 10-minute pricing guide. One payment, no subscription, 30-day guarantee.