Markup vs margin calculator for contractors
A 20 percent markup leaves a 16.67 percent margin. This calculator converts markup to margin, margin to markup, and shows the price that reaches a target margin.
Markup and margin from your job cost
Enter the cost of the job, pick the figure you already know, and the calculator returns the other three with the arithmetic that produced them.
Price, profit and margin for this job
A markup of 20% on $50,000.00 of cost leaves a margin of 16.67%.
- Direct cost (material + labor + subcontractors)
- $50,000.00
- Price to quote (cost + profit)
- $60,000.00
- Gross profit (price − cost)
- $10,000.00
- Markup (profit ÷ cost)
- 20%
- Margin (profit ÷ price)
- 16.67%
- Multiplier (price ÷ cost)
- 1.20
To keep 20% of the invoice instead, add 25% to cost and quote $62,500.00.
The markup and margin formula
- Markup = (price − cost) ÷ cost
- Margin = (price − cost) ÷ price
- Margin = markup ÷ (1 + markup)
- Markup = margin ÷ (1 − margin)
- Price = cost ÷ (1 − target margin)
- Multiplier = 1 + markup = 1 ÷ (1 − margin)
The calculator prices one job at one rate. A live bid carries dozens of line items in different cost groups, and the blended margin shifts every time one of them is repriced.
Questions about Markup vs margin calculator for contractors
Is a 20 percent markup the same as a 20 percent margin?
No. A 20 percent markup on 50,000 of cost gives a 60,000 price and 10,000 of profit, which is 16.67 percent of that price. To reach a 20 percent margin you have to price at 62,500, which is a 25 percent markup on the same cost.
How do I convert a target margin into a markup?
Divide the margin by one minus the margin. A 30 percent target becomes 0.30 divided by 0.70, or 42.86 percent markup. The shortcut most estimators use instead is the multiplier: divide cost by one minus the margin, so a 30 percent margin means cost times 1.4286.
Why does my accountant report a lower percentage than I quoted?
Because the profit and loss statement divides gross profit by revenue, which is the margin. Your estimate divided the same profit by cost, which is the markup, and cost is the smaller number. Nothing is missing; the two departments are dividing by different figures.
Should material and labor carry the same markup?
They often do not. Many builders add less to a large material package than to labor, because the risk and the supervision sit with the crew. Run each cost group through the calculator separately, then check the blended margin on the combined price before the bid goes out.
Use the calculation with your own project data
Request a trial period and tell us which workflow you want to test. We prepare Home Builder Software around that part of your work without fixing a term before we know the scope.