Contractor Markup vs. Margin Calculator
Markup and margin are often confused: markup is the percentage added to cost to reach the price, while margin is the percentage of the final price that is profit. Enter your cost and either a markup or a margin percentage to see the resulting sell price and the equivalent of the other measure.
One profit, two denominators
Markup measures profit against your cost; margin measures the same profit against the price the client pays. Because the price is the larger number, the margin figure is always the smaller one:
markup mode: price = cost × (1 + markup/100)
margin = markup ÷ (100 + markup) × 100
margin mode: price = cost ÷ (1 - margin/100)
markup = margin ÷ (100 - margin) × 100A $100 cost with 25% markup prices at $125: $25 of profit, which is 25% of the cost but only 20% of the price. Ask instead for a 25% margin and the price rises to $133.33, because that needs 33.33% of markup.
Converting between the two
| Markup | Margin | Price on $100 cost |
|---|---|---|
| 20% | 16.67% | $120.00 |
| 25% | 20.00% | $125.00 |
| 50% | 33.33% | $150.00 |
| 100% | 50.00% | $200.00 |
Margin mode refuses 100% or more, since no finite price can be all profit, and a cost of zero is rejected rather than treated as free.
Frequently asked questions
What markup do I need for a 30% margin?
42.86%. Divide 30 by 70 and multiply by 100. A $100 cost then sells at $142.86, of which $42.86 is profit - exactly 30% of the price.
Why is a 25% markup only a 20% margin?
The dollars are identical; only the divisor changes. $25 of profit over $100 of cost is 25%, and the same $25 over the $125 the client pays is 20%.
Should contractors quote markup or margin?
Markup is the natural way to price up materials and subcontractor invoices, while margin is what tells you whether the business survives, since overhead and tax are shares of revenue. Say in the contract which one a stated percentage means.