Markup & Margin Calculator

Calculate selling price, markup percentage, and gross margin — and see why they are not the same number.

Your Cost ($)

Target Margin (%)

Margin = profit ÷ selling price

warning

Markup and margin are NOT the same. A 30% markup results in only a 23.1% margin. Many contractors underprice by confusing the two.

Selling Price

$12,500.00

Gross Profit: $2,500.00

Your Cost	$10,000.00
Selling Price	$12,500.00
Gross Profit	$2,500.00
Markup %	25.0%
Margin %	20.0%

Quick Reference: Markup vs. Margin

Markup %	Margin %
10%	9.1%
15%	13.0%
20%	16.7%
25%	20.0%
30%	23.1%
40%	28.6%
50%	33.3%
67%	40.0%
100%	50.0%

Markup = (Price − Cost) / Cost. Margin = (Price − Cost) / Price. These formulas are identical in dollar profit but different in percentage — always specify which one you mean when discussing bids.

Frequently Asked Questions

What is the difference between markup and margin?

Markup is profit divided by cost; margin is profit divided by price. Both use the same dollar profit amount but different denominators, which is why they always produce different percentages. A $2,000 profit on a $10,000 cost is a 20% markup, but on a $12,000 selling price it is only a 16.7% margin.

What markup should a contractor charge?

Most general contractors target 15–25% gross margin, which requires an 18–33% markup on cost. Specialty trades (electrical, plumbing, HVAC) often run 25–35% margin. Overhead-heavy firms with large offices or many salaried staff need higher margins to achieve the same net profit.

How do I calculate selling price from margin?

Selling Price = Cost ÷ (1 − Margin%). Example: a $10,000 cost at a 20% target margin = $10,000 ÷ (1 − 0.20) = $12,500. Never calculate it as Cost × (1 + Margin%) — that gives you a markup result, not a margin result.

Is a 10% profit margin good for a contractor?

10% net margin is average for general contractors. Top-performing firms achieve 15–20% net. Below 8% is thin for the risk level in construction — one bad project or slow-pay client can wipe the year. Gross margin needs to be higher (20–30%) to cover overhead before netting 10–15%.

How the Markup & Margin Calculator works

Markup and margin describe the same dollar of profit against two different denominators. Markup is profit ÷ cost. Margin is profit ÷ selling price. Because cost is always lower than price, the markup number is always the larger of the two, and confusing them is the most common way a contractor prices a job for less profit than intended.

The calculator runs three modes. Cost to pricetakes your cost and a target margin and returns price = cost ÷ (1 − margin) — note the division, which is where most pricing errors start. Markup to pricetakes a target markup and returns price = cost × (1 + markup). Price and cost takes both actual numbers and reports what markup and margin you actually achieved.

Every mode reports all four figures — selling price, gross profit, markup, and margin — so you can see the pairing. A 20% margin is a 25% markup. A 25% margin is a 33.3% markup. A 33.3% margin is a 50% markup. A 50% margin is a 100% markup.

Worked example: a job costs $10,000 and you want a 20% margin. Price = 10,000 ÷ (1 − 0.20) = $12,500. Gross profit is $2,500, which is 25% of the $10,000 cost and 20% of the $12,500 price. Had you instead added 20% to cost, you would have bid $12,000 and earned a 16.7% margin — $500 less on a single job, and on $2M of annual volume that gap is $83,000.

Frequently Asked Questions

What is the difference between markup and margin?

Markup is profit measured against cost. Margin is profit measured against the selling price. The same dollar of profit produces a bigger markup number than margin number, because cost is always smaller than price. On a $10,000 job sold for $12,500, the $2,500 profit is a 25% markup on cost but only a 20% margin on price.

What markup do I need to hit a 20% margin?

You need 25% markup. The formula is markup = margin / (1 - margin), so 0.20 / 0.80 = 0.25. This is the single most expensive mistake in construction pricing: adding 20% to cost when you meant to earn a 20% margin leaves you at 16.7% margin, quietly giving away a third of the profit you planned for.

How do I price a job from cost and a target margin?

Divide cost by (1 - margin), not multiply by (1 + margin). A $10,000 cost at a 30% target margin prices at 10,000 / 0.70 = $14,286, not $13,000. The cost-to-price mode does this for you and shows the equivalent markup so you can sanity check it against your usual numbers.

Can margin ever reach 100%?

No. Margin approaches 100% only as cost approaches zero, because margin is profit divided by price and price always includes the cost. Markup has no ceiling — a 100% markup simply means you doubled cost, which is a 50% margin. The calculator returns no result if you enter a target margin of 100% or more, since the math has no solution.