The contractor markup calculator converts between markup percentage and profit margin so you can price jobs correctly. Many contractors lose money by confusing the two — 50% markup is only 33.3% margin, not 50%.
Job Pricing
Include labor, materials, and overhead
Calculate from:
Markup vs Margin Reference
| Markup % | Margin % | $100 cost → price |
|---|---|---|
| 10% | 9.1% | $110 |
| 20% | 16.7% | $120 |
| 33% | 24.8% | $133 |
| 50% | 33.3% | $150 |
| 67% | 40.1% | $167 |
| 100% | 50.0% | $200 |
| 150% | 60.0% | $250 |
| 200% | 66.7% | $300 |
How to Use the Contractor Markup Calculator
Contractors who confuse markup and margin consistently under-price their work and erode profits without knowing it. The distinction sounds simple but costs thousands of dollars per year when misapplied.
Markup vs Margin: The critical difference
Markup is calculated on cost: a $500 job with 40% markup = $700 price ($200 profit on top of cost).
Margin is calculated on price: that same $700 price with $200 profit = 28.6% margin ($200 / $700).
If you tell a customer "I make 40% profit," but you're using markup, you're actually making 28.6% margin. Not wrong, but confusing — and problematic if you're using margin benchmarks from an industry with the opposite convention.
How to price a job
First, calculate your total job cost: materials + direct labor + allocated overhead (vehicles, insurance, tools, office). Many contractors forget overhead and end up with a 0% net margin even at 30% gross. Then apply your markup to get the selling price. A 40–50% markup on total cost is common for residential contractors.
What markup do you need?
To hit a 30% net profit margin after 20% overhead, you need roughly a 67% markup. Most contractors charging 33% markup (25% margin) are barely covering overhead and have almost no net profit. Run the numbers before quoting.
FAQ
What is the difference between markup and profit margin?
Markup is the percentage added ON TOP of cost. Margin is profit as a percentage of the SELLING PRICE. A 50% markup on $100 cost = $150 price = 33.3% margin. They are different numbers, and confusing them is a common contractor pricing mistake that leads to underearning.
What markup should contractors charge?
Most residential contractors target a 33–50% markup (25–33% gross margin) on materials, and higher on labor. Specialty trades like electrical or HVAC often mark up 50–100% on materials. The right markup depends on your overhead rate, local competition, and target net profit.
How do I calculate selling price from markup?
Selling price = Cost × (1 + Markup%). Example: $500 job cost with 40% markup = $500 × 1.40 = $700 selling price. The $200 difference is your gross profit before overhead.
Why do contractors undercharge?
Most contractors either forget to include overhead (trucks, insurance, office, tools) in their cost basis, or confuse markup and margin. A 30% markup sounds like a 30% profit, but it's actually only a 23% margin — much less after overhead is paid.
Is this tool free?
Yes, completely free with no signup required.
What is a good gross margin for a contracting business?
Service contractors typically target 30–40% gross margin. After overhead (typically 20–25% of revenue for small contractors), net profit should be 10–15%. If gross margin is below 25%, overhead will eat most or all of your profit.