Free tool · Pricing
Markup vs. Margin Calculator
Markup and margin are not the same number, and mixing them up is one of the most common ways a bid ends up thinner than planned. Enter your cost and whichever number you know, and the calculator shows the price, the profit, the markup and the margin together.
The numbers stay in your browser: nothing is saved or sent anywhere.
Selling price
—
Profit
—
Markup
—
Margin
—
The difference
Markup is profit as a share of your cost: (price − cost) ÷ cost.
Margin is profit as a share of your selling price: (price − cost) ÷ price.
Because price is always bigger than cost, a margin is always a smaller percentage than the markup on the same job.
A worked example
Your cost is $1,000. A 20 percent markup gives a price of $1,200, a profit of $200 and a margin of only 16.7 percent.
To earn a 20 percent margin on the same $1,000 cost, the price has to be $1,250. That is a 25 percent markup.
Markup and the margin it produces
• 10% markup is a 9.1% margin.
• 20% markup is a 16.7% margin.
• 25% markup is a 20% margin.
• 30% markup is a 23.1% margin.
• 50% markup is a 33.3% margin.
• 100% markup (double your cost) is a 50% margin.
Why contractors get caught
A contractor who needs a 20 percent margin to cover overhead and profit, but adds a 20 percent markup, ends up short. On a $500,000 job at 16.7 percent margin instead of 20 percent, that is about $16,700 less than planned. Decide which number your overhead and profit goals are written in, and use the same one every time.
FAQ
Which is better to use, markup or margin?
Neither is better. Margin is easier to compare against financial statements, which report profit as a share of sales. Markup is easier to apply to a cost build-up. What matters is knowing which one you are using.
Can a margin be 100 percent?
No. Margin is profit divided by price, so it always stays under 100 percent. Markup can be any size.
How do I convert markup to margin?
Margin = markup ÷ (1 + markup). For a 25 percent markup that is 0.25 ÷ 1.25 = 20 percent.
Is anything I type saved?
No. The calculation runs in your browser and nothing is stored or sent to us.
Pricing a whole bid? Construction Bid Manager carries your markup through every bid you send and track.
Questions?
Ask us anything about PoPs Suite, pricing, or running a construction company. A real person answers, usually within a business day.