Markup vs. Margin Calculator
Markup and margin are not the same number, and mixing them up costs contractors money. Enter job cost, markup and overhead to see the client price, gross margin and net profit on a remodel or construction job.
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Three steps, about a minute
Step 1
Enter the Job cost (labor + materials + subs) before any markup is added.
Step 2
Set your Markup and your Overhead as % of price, using last year's numbers for overhead.
Step 3
Compare Gross margin with Net profit after overhead to see what the job really keeps.
How the markup vs margin calculator works
Markup is a percentage added on top of cost. Margin is the percentage of the selling price you keep. The tool multiplies job cost by (1 + markup) for the price to the client, subtracts cost for gross profit, and divides gross profit by price for gross margin. Overhead is entered as a share of price, so net profit is gross profit minus price × overhead %. The defaults show the gap clearly: $30,000 of cost at a 35% markup becomes a $40,500 price and $10,500 of gross profit, only a 25.9% margin. Overhead at 12% of price takes $4,860, leaving $5,640, or 13.9% net. The same effect is why a 50% markup equals a 33% margin. Set the overhead percent from your actual books, with your accountant if needed.
| Job cost (labor + materials + subs) | $30,000 |
|---|---|
| Markup | 35% |
| Overhead as % of price | 12% |
| Price to client | $40,500 |
|---|---|
| Gross profit | $10,500 |
| Gross margin | 25.9% |
| Net profit after overhead | $5,640 (13.9%) |
A 50% markup is a 33% margin. Pricing on margin instead of markup is one of the easiest ways contractors protect profit.
Using the numbers like a pro: tips for remodelers
Pick a target margin first and work back to price: cost ÷ (1 - margin). A 30% margin on $30,000 of cost is $42,857, not the $39,000 a 30% markup gives.
Recalculate overhead every year. Rent, trucks, insurance, office staff and software all creep up, and an overhead percent from three years ago quietly eats into net profit.
Price change orders at the same margin as the base contract. Small add-ons sold near cost often take more office time and site disruption than they bring in.
Put a calculator like this on your own website
Price is usually the first thing a remodeling prospect asks about. A budget calculator on your site, such as a kitchen or bathroom cost range, gives them a starting figure and asks for contact details to send a detailed estimate. Behind it, this markup and margin math keeps those ranges profitable. We can build that estimator around your own markup and line items.
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Markup vs. Margin Calculator questions
What is the difference between markup and margin?
Markup is profit as a percentage of cost. Margin is profit as a percentage of the selling price. A job that costs $10,000 and sells for $15,000 has a 50% markup but a 33% margin, because the $5,000 profit is half of the cost and one third of the price.
How do I convert markup to margin?
Divide the markup by 1 plus the markup. A 25% markup is 0.25 ÷ 1.25, a 20% margin. A 35% markup gives about 25.9%, and a 50% markup about 33.3%. To go the other way, divide margin by 1 minus margin, so a 20% margin needs a 25% markup.
Why is net profit lower than gross profit?
Gross profit only removes direct job costs: labor, materials and subcontractors. Net profit also takes out overhead, the cost of running the business, such as office rent, vehicles, insurance, software and admin salaries. A job can show healthy gross profit and still lose money if overhead is not built into the price.
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