Markup vs Margin Calculator for Contractors

Use this free markup vs margin calculator to instantly convert between the two and find the selling price that delivers your target profit. Confusing markup and margin costs money on every job — know the difference before you price your next quote.

Markup vs Margin Calculator

Your Cost ($)

Markup (%)

Selling Price$0.00

Profit Amount$0.00

Markup0%

Margin0%

Markup is profit as a % of cost. Margin is profit as a % of selling price. A 30% markup equals a 23% margin.

TradeToolCalc calculators are for informational and educational purposes only. Results are estimates based on the inputs you provide and should not be relied upon as financial, legal, or professional advice. Always verify figures with a qualified accountant or business advisor before making pricing or business decisions. TradeToolCalc accepts no liability for decisions made based on calculator outputs.

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Markup vs Margin — Frequently Asked Questions

Markup is the percentage you add on top of your cost to arrive at a selling price. Margin (or gross margin) is the percentage of the final selling price that is profit. A 25% markup on a $100 cost gives you a $125 selling price — but your margin on that sale is only 20%, not 25%. The same dollar amount of profit looks different depending on which base you measure it against.

The most common mistake is applying the target margin percentage directly as a markup. If you want a 30% profit margin and you add 30% to your costs, you actually end up with only a 23% margin — leaving money on the table on every single job. Over a full year this gap can cost a sole proprietor tens of thousands of dollars in lost profit.

Use this formula: Margin = Markup — (1 + Markup). For example, a 40% markup gives a margin of 0.40 — 1.40 = 28.6%. Going the other way — from margin to markup — use: Markup = Margin — (1 - Margin). A 30% margin requires a markup of 0.30 — 0.70 = 42.9%. The calculator above does this instantly for any numbers you enter.

There is no single "right" markup for every trade. Most successful trade businesses target a gross margin of 20—35%, which means applying a markup of roughly 25—54% on top of direct costs (labor and materials). The right number for you depends on your overhead costs, local market rates, and the profit you need to take home. Use the Overhead Cost Calculator and Hourly Rate Calculator on this site to find your floor before choosing a markup.

Many contractors apply a higher markup to materials than to labor, because materials carry risk (price changes, waste, returns) and clients often scrutinize hourly labor rates more carefully than a line-item material cost. A common approach is to mark up materials 20—30% and price labor at a rate that already includes your overhead and profit target. Whatever system you use, make sure your overall margin covers all costs and leaves you a healthy take-home.

Markup vs Margin Calculator