What do you want to calculate?
Enter cost and markup to find selling price
Materials + labor + subs + expenses
Percentage added on top of cost
Office, insurance, vehicles, admin
Markup to Margin Quick Reference
Common conversions every contractor should know.
| Markup % | Margin % |
|---|---|
| 10% | 9.1% |
| 15% | 13% |
| 20% | 16.7% |
| 25% | 20% |
| 30% | 23.1% |
| 35% | 25.9% |
| 40% | 28.6% |
| 43% | 30.1% |
| 50% | 33.3% |
| 54% | 35.1% |
| 67% | 40.1% |
| 75% | 42.9% |
| 100% | 50% |
Highlighted rows show the markup needed for 30%, 35%, and 40% margin targets.
Contractor Markup & Margin Guide
The numbers behind profitable contractor pricing. Margin targets by trade, markup conversion shortcuts, and common mistakes to avoid.
What Markup Should a Contractor Use?
Most residential contractors need a 40–67% markup on costs to achieve a healthy 30–40% profit margin.
- 30% margin requires 42.9% markup (multiply cost × 1.43)
- 35% margin requires 53.8% markup (multiply cost × 1.54)
- 40% margin requires 66.7% markup (multiply cost × 1.67)
The most common mistake: confusing a 30% markup with a 30% margin. A 30% markup only yields a 23% margin — well below what most contractors need to cover overhead and profit.
Key Takeaways
- 30% margin = 43% markup (not 30%)
- Residential remodelers should target 30–40% margin
- 30% markup only yields 23% actual margin
Markup vs. Margin: The Critical Difference
Markup is calculated on cost; margin is calculated on selling price. They are never the same number.
- Markup formula: (Selling Price - Cost) ÷ Cost × 100
- Margin formula: (Selling Price - Cost) ÷ Selling Price × 100
- Example: $10,000 cost + 50% markup = $15,000 price = 33.3% margin
To convert: Margin = Markup ÷ (1 + Markup). Or use the shortcut: Selling Price = Cost ÷ (1 - Desired Margin).
Key Takeaways
- Markup is based on cost, margin on revenue
- 50% markup = 33.3% margin
- Price = Cost ÷ (1 - Desired Margin)
Recommended Margins by Contractor Type
Margin targets vary by trade and project type. Service trades command higher margins than general contracting.
- New home builders: 15–25% gross margin
- Commercial GC: 10–20% gross margin
- Residential remodelers: 30–40% gross margin
- Service trades (plumbing, HVAC, electrical): 40–50% gross margin
- Handyman/small jobs: 40–60% gross margin
Gross margin must cover all overhead (office, trucks, insurance, admin staff) AND your net profit. If overhead is 25%, you need 35%+ gross margin to survive.
Key Takeaways
- Residential remodelers: 30–40% gross margin
- Service trades: 40–50% gross margin
- Gross margin must cover overhead + net profit
How to Use This Calculator
Choose Your Calculation Mode
Pick "Cost + Markup" to price a job, "Cost + Desired Margin" to find the markup needed for a target margin, or "Selling Price + Cost" to analyze a completed job.
Enter Your Numbers
Input your total job cost (materials, labor, subs, and expenses). Then enter your markup percentage, target margin, or selling price depending on the mode you chose.
Add Overhead (Optional)
Enter your overhead rate to see net profit after office costs, insurance, vehicles, and admin expenses are factored in.
Review Your Results
See your selling price, gross profit, markup percentage, and profit margin side by side. If overhead is entered, you also get net profit and net margin.
Markup & Margin Formulas
Selling Price = Cost × (1 + Markup%/100)
Selling Price = Cost ÷ (1 − Margin%/100)
Markup% = Margin% ÷ (1 − Margin%/100)
Margin% = Markup% ÷ (1 + Markup%/100)Where:
- Cost
- = Total job cost (materials + labor + subs + expenses)
- Markup%
- = Percentage added on top of cost
- Margin%
- = Profit as a percentage of selling price
- Overhead%
- = Business expenses as a percentage of revenue (office, insurance, admin)
- Net Profit
- = Gross profit minus overhead costs
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Frequently Asked Questions
Why is my 30% markup only giving me a 23% profit margin?
Because markup and margin are calculated differently. Markup is a percentage of your cost, while margin is a percentage of the selling price. A 30% markup on a $10,000 job means you add $3,000 to get $13,000. But $3,000 profit on a $13,000 sale is only 23.1% margin. To hit a 30% margin, you need a 43% markup.
What markup do I need for a 35% profit margin?
You need a 53.8% markup to achieve a 35% margin. The formula is: Markup = Margin / (1 - Margin). So 0.35 / (1 - 0.35) = 0.538, or 53.8%. Use the "Cost + Desired Margin" mode in the calculator above to verify this with your actual job costs.
Should I include overhead in my markup or track it separately?
Both approaches work, but tracking overhead separately gives you clearer visibility into your true profitability. Many contractors use a two-step method: apply markup to cover profit, then use the overhead field in this calculator to verify that their gross margin exceeds their overhead rate. If your overhead runs 20-25% of revenue, you need at least a 30%+ gross margin to turn a net profit.
How do I price change orders using markup?
Apply the same markup percentage you used for the original bid. Calculate the additional materials, labor, and time, then mark it up consistently. The "Cost + Markup" mode works well for this. Some contractors add a small premium (2-5%) on change orders to account for the disruption to scheduling and workflow.
What if my competitor is charging less than my calculated price?
Do not lower your markup to match. Contractors who underprice to win bids often skip overhead recovery and end up losing money. Instead, focus on communicating value: quality of materials, warranty, licensing, insurance, and track record. If you consistently lose bids, look at reducing your costs (better supplier pricing, efficient crews) rather than cutting your margin.
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