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Markup vs. Margin Calculator

Free markup and margin calculator for contractors. Convert between markup and margin instantly, and stop losing money to the two words most contractors use interchangeably.

Most contractors use "markup" and "margin" interchangeably, and lose real money doing it. A 50% markup is NOT a 50% margin. This calculator converts between the two so you can stop guessing and start pricing correctly.

Cost (your actual cost)

Calculate by

Percentage (enter as number, e.g., 50 for 50%)

Markup adds to cost (Cost × (1 + markup%) = Price). Margin is the profit as a % of the selling price (Profit ÷ Price = margin%). A 50% markup gives you a 33.3% margin. A 50% margin requires a 100% markup. Get this wrong on every job and it adds up fast.

The mistake this fixes

Markup and margin are not the same number, and treating them as if they are is one of the most expensive habits in the trades. Markup is the percentage you add on top of your cost. Margin is the percentage of the final selling price that is profit. Same job, same dollars, two completely different percentages.

A 50% markup gives you a 33.3% margin. If you need a 50% margin, you have to apply a 100% markup. A contractor who marks up 20% believing they are earning a 20% margin is actually earning 16.7%, and they are running that gap on every invoice they write.

Why the gap compounds

On a single $400 material purchase the difference is small enough to ignore. Across a year of jobs it is the difference between a business that funds a replacement truck and one that finances it.

The error also hides inside quoting software and spreadsheets, because most of them ask for one number and never say which convention they are using. If you have never explicitly checked, assume you are off.

How to use the result

Enter your real cost, choose whether the percentage you have in mind is markup or margin, and read the converted figure. Use it to sanity-check the pricing you are already running before you change anything.

Then work the number backwards. Decide the margin the business needs to survive, and let the calculator tell you the markup that produces it. That is the correct direction: margin is the goal, markup is the mechanism.

Common questions

Is a 50% markup the same as a 50% margin?

No. A 50% markup produces a 33.3% margin. To reach a 50% margin you need a 100% markup. This single confusion is the most common pricing error in the trades.

Should contractors price on markup or margin?

Think in margin, quote in markup. Margin tells you whether the business is viable because it is measured against the money actually coming in. Markup is just the arithmetic you apply to cost to get there.

What margin should a contractor target?

It varies by trade, market, and overhead, so no single number is right for everyone. The dependable approach is to calculate your break-even hourly rate first, then set margin above it deliberately rather than copying a figure from someone else's business.

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