Contractor Markup Calculator
Convert between markup and margin, and calculate the multiplier for any target margin.
- Price
- $1,500.00
- Equivalent margin
- 33.33%
- Multiplier
- 1.5x
- Profit dollars
- $500.00
Multiply cost by this to get price
Markup and margin are not the same
Markup is a percentage added to cost. Margin is a percentage of the final price. A 50 percent markup on $100 cost gives a $150 price, and the $50 profit is 33 percent of that price. That is a 50 percent markup and a 33 percent margin, describing the same transaction two different ways.
Contractors who quote based on markup and expect the corresponding margin come up short every time. The conversion table below solves this once you memorize a few pairs.
Common markup / margin conversion table
20 percent markup = 16.7 percent margin.
25 percent markup = 20 percent margin.
33 percent markup = 25 percent margin.
43 percent markup = 30 percent margin.
50 percent markup = 33 percent margin.
67 percent markup = 40 percent margin.
100 percent markup = 50 percent margin.
150 percent markup = 60 percent margin.
Formula both directions
Markup to margin: margin = markup / (1 + markup). A 50 percent markup: 0.50 / 1.50 = 33.3 percent margin.
Margin to markup: markup = margin / (1 - margin). A 30 percent margin: 0.30 / 0.70 = 42.9 percent markup.
Price multiplier from margin: multiplier = 1 / (1 - margin). For 30 percent margin, multiplier is 1.429. Multiply any cost by 1.429 to get a price that produces 30 percent margin.
Why margin is the number that matters
Financial statements report gross margin, not markup. When your accountant says the business ran a 22 percent gross margin last year, that is dollars of profit divided by dollars of revenue.
Set target pricing based on the margin you need, then reverse into the markup multiplier and use that number when writing bids. This way the reports and the bidding software agree.
Trade-specific markup norms
Materials-heavy trades (roofing, flooring, concrete): 20 to 35 percent markup on materials, 60 to 100 percent markup on labor.
Service trades (plumbing, electrical, HVAC): 40 to 100 percent markup on materials for service work, plus service call fees and diagnostic charges.
Remodel and custom work: often quoted as cost plus 15 to 25 percent for cost-plus jobs, or full lump-sum bids at 40 to 60 percent markup on direct cost.
Frequently asked.
- What is the difference between markup and margin?
- Markup is profit as a percent of cost. Margin is profit as a percent of price. A 50 percent markup equals a 33 percent margin on the same transaction.
- How do I convert markup to margin?
- Divide markup by (1 + markup). 50 percent markup = 0.50 / 1.50 = 33 percent margin.
- What markup should a contractor use?
- Enough to produce your target gross margin after overhead. Most residential contractors need 43 to 67 percent markup to hit 30 to 40 percent gross margin.
- Is 50 percent markup enough profit?
- 50 percent markup is 33 percent gross margin. After 15 to 20 percent overhead, that is 13 to 18 percent net. Adequate for volume work; thin for custom residential.
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