Markup vs margin calculator
Enter your cost and either number. The calculator gives you the price, the profit in dollars, and the other percentage. Edit any of them and the rest follow.
A 20.0% markup on $1,000 is a 16.7% margin. Same dollars, two different percentages.
| Markup | 10% | 15% | 20% | 25% | 30% | 40% | 50% | 75% | 100% |
|---|---|---|---|---|---|---|---|---|---|
| Margin | 9.1% | 13.0% | 16.7% | 20.0% | 23.1% | 28.6% | 33.3% | 42.9% | 50.0% |
Your numbers stay in this browser so the next job starts from them. Nothing is sent anywhere.
The thing half of contractors get wrong
You buy a water heater for $1,000 and add 20 percent. You sell it for $1,200. You tell yourself you made 20 percent. You made $200, and $200 is 16.7 percent of $1,200. That is your margin, and it is the number that decides whether the business makes money.
It gets worse at the numbers people actually use. A contractor who wants to keep 30 percent of every dollar and marks up by 30 percent is keeping 23. The one who wants 50 percent needs to mark up by 100 percent, not 50. The table under the calculator shows every pair.
How to use the two numbers
- Markup is for building a price. You know the cost. Multiply it up.
- Margin is for judging the result. What percentage of what the customer paid did you keep?
- Going backward: if you know the margin you want, the calculator gives the markup that gets there.
Where the real money is
Markup on materials is handling money. It pays for the pickup, the return, the one that was wrong, and the warranty call. The profit in a trade business is in the labor rate. If the labor is priced on the hours you really bill, the markup on materials is a bonus. If the labor is priced too low, no markup fixes it.
Questions contractors ask
What is the difference between markup and margin?
Markup is the percentage you add to your cost. Margin is the percentage of the final price that is profit. A $1,000 cost with a 20 percent markup sells for $1,200. The $200 profit is 20 percent of the cost but only 16.7 percent of the price. Same dollars, two numbers.
Which one should I use?
Build prices with markup, because you know your cost. Judge the business with margin, because that is what the accountant and the bank look at. Just do not say 20 percent and mean both.
Is a 20 percent markup enough?
On materials alone it covers pickup, handling, and the trip back when one is wrong, and not much more. The profit in a contracting business mostly comes from labor priced right. See the hourly rate calculator.
What markup do contractors put on materials?
It varies by trade and job size, and there is no rule. Many one-truck contractors use something between 10 and 30 percent on materials and pass permits through at cost or with a small handling fee. Pick a number and use it on every bid.
Should the customer see the markup?
No. The bid shows one price. The scope explains the price. The markup is how you got there.
The other tools
- Hourly rate calculator. What to charge per hour, from what you want to take home, your overhead, and the hours you can bill.
- Job price calculator. Materials, labor, markup, and the deposit to ask for. The number that goes on the bid.
- Deposit calculator. Job price and the materials you buy first, out comes the deposit, the schedule, and the payment terms line for the bid.
- Invoice generator. Your business, the customer, the lines, tax, the deposit already paid. A clean PDF invoice, no account.
When the number is right, put it on an estimate the customer signs on their phone. Type the job and see it, no account needed. 30 days free, then $29 a month.