Free calculator
Markup vs Margin Calculator
Enter your job cost and any one of markup, margin or selling price to get the other two. Then price the job to cover company overhead and the net profit you want, and see what adding both to cost really earns.
- Markup, margin, price
- Overhead and net profit
- Conversion table
- No email required
Markup and margin
Enter your cost, then any one of the three below. The other two are worked out from it.
Shaded fields are calculated. Why the two percentages never match: construction markup vs. margin.
Your estimate on this site totals ().
Overhead and net profit
Uses the job cost above. Company overhead is what it costs to run the business whether or not you have this job: office, insurance, vehicles, admin pay.
Work out your overhead rate from last year
Saved in this browser only. These two figures are never put in the page address.
Markup and margin table
Margin = markup ÷ (1 + markup). Markup = margin ÷ (1 − margin). Rounded to one decimal.
| Markup | Margin |
|---|---|
| 10% | 9.1% |
| 15% | 13.0% |
| 20% | 16.7% |
| 25% | 20.0% |
| 30% | 23.1% |
| 35% | 25.9% |
| 40% | 28.6% |
| 45% | 31.0% |
| 50% | 33.3% |
| 60% | 37.5% |
| 70% | 41.2% |
| 75% | 42.9% |
| 80% | 44.4% |
| 90% | 47.4% |
| 100% | 50.0% |
| Margin | Markup |
|---|---|
| 5% | 5.3% |
| 10% | 11.1% |
| 15% | 17.6% |
| 20% | 25.0% |
| 25% | 33.3% |
| 30% | 42.9% |
| 35% | 53.8% |
| 40% | 66.7% |
| 45% | 81.8% |
| 50% | 100.0% |
How it’s calculated
Markup and margin. Markup is gross profit as a share of cost: (price − cost) ÷ cost. Margin is gross profit as a share of the selling price: (price − cost) ÷ price. So margin = markup ÷ (1 + markup) and markup = margin ÷ (1 − margin). From a markup, price = cost × (1 + markup). From a margin, price = cost ÷ (1 − margin). From a price, both percentages come from price − cost. Gross profit is price − cost, before overhead.
Overhead and net profit. With overhead as a percentage of revenue, overhead and net profit are both shares of the price, so price = cost ÷ (1 − overhead − net profit) and the gross margin is overhead + net profit. With overhead as a percentage of job cost, overhead goes on first and net profit comes off the price: price = cost × (1 + overhead) ÷ (1 − net profit). Both are (cost + overhead dollars) ÷ (1 − net profit), the same formula the construction estimate template uses. The markup shown is price ÷ cost − 1.
Your overhead rate. Annual overhead ÷ annual revenue, or ÷ annual direct job cost if you track overhead against cost. Use a full year from your books. These two figures stay in this browser.
Adding both to cost. When overhead and profit are written as “10 and 10” on an insurance repair estimate, they are charged as 20% on top of the total job (United Policyholders’ guide to overhead and profit). The check adds your two rates to cost the same way, works out the margin that markup gives, takes out your overhead and shows the net profit left, and how far that price falls below the one that covers both.
Rounding. Results show two decimals; the table shows one. Nothing is priced with numbers you did not enter.
BuildWorkPro bids work on the revenue basis: the Rates tab on a bid sets margin, commission and company overhead, each as a percentage of the selling price. See construction bidding, or read construction markup vs. margin for the worked examples.
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Frequently asked questions
What is a 20% markup as a margin?
16.67%. Margin = markup ÷ (1 + markup), so 0.20 ÷ 1.20 = 0.1667. A 20% markup adds $20 to every $100 of cost for a $120.00 price, and $20.00 is 16.67% of $120.00. The margin is always the smaller number, because it is measured against the larger price.
What markup do I need for a 25% margin?
33.33%. Markup = margin ÷ (1 − margin), so 0.25 ÷ 0.75 = 0.3333. On $100 of cost that is a $133.33 price with $33.33 of gross profit, which is 25% of the price. A 25% markup only gets you a 20% margin.
What is the difference between markup and margin?
Markup is profit as a share of your cost. Margin is profit as a share of the selling price. They describe the same dollars from opposite ends, so the percentages never match: a 30% markup is a 23.08% margin, and a 30% margin takes a 42.86% markup. Apply a 30% markup when you meant a 30% margin and the job earns 23.08%.
How do I include overhead in my price?
Treat overhead and net profit as two shares of the selling price and divide the job cost by what is left: price = cost ÷ (1 − overhead − net profit). With overhead at 10% of revenue and a 10% net profit target, that is cost ÷ 0.80, a 25% markup and a 20% gross margin. If you track overhead as a percentage of job cost instead, add it to the cost first: price = cost × (1 + overhead) ÷ (1 − net profit). At 10% and 10% that is a 22.22% markup.
Why is “10 and 10” not a 20% margin?
“10 and 10” adds 10% for overhead and 10% for profit to the cost. That is a 20% markup, and a 20% markup is a 16.67% margin. If your overhead runs 10% of revenue, it takes 10 points of that, leaving 6.67% net profit instead of 10%. Even if overhead is 10% of job cost, a 10% profit on cost is only 8.33% of the price. To keep 10% for overhead and 10% for profit, both as shares of the price, divide the cost by 0.80: a 25% markup.
What profit margin do contractors use?
It depends on your overhead, because gross margin has to pay for overhead before any of it is profit: gross margin = overhead + net profit, both as shares of revenue. For reference, CFMA’s 2024 Construction Financial Benchmarker, a survey of contractors’ 2023 financial statements, put sales, general and administrative costs at 11.8% of revenue across all respondents, and net income before taxes at 6.9% for specialty trade contractors. Overhead of 11.8% and a net of 6.9% would need a gross margin of 18.7%, which is a markup of 23%. Use your own overhead from last year’s books, not a survey average.