Markup vs Margin Calculator
The most expensive confusion in contracting: marking a job up 20% is not a 20% margin — it is 16.7%. This calculator runs both directions so the number you price by is the number you actually keep.
Forward: price from a target margin
Reverse: what your price actually earns
This is the mistake-revealer. Enter the price you were about to charge and see the margin you would actually make.
The confusion table
Same job, same dollars — two different percentages. Markup is figured on your cost; margin is figured on the price. They are only equal at zero.
| If you mark up by | Your true margin is |
|---|---|
| 10% | 9.1% |
| 15% | 13.0% |
| 20% | 16.7% |
| 25% | 20.0% |
| 33% | 24.8% |
| 50% | 33.3% |
Why margin is the number that pays the bills: overhead — rent, insurance, the truck, your own pay — comes out of gross profit, and gross profit is a share of the price, not of the cost. Price by margin and the overhead share is planned. Price by markup and it is whatever is left.
Questions contractors ask
What is the difference between markup and margin? Markup is profit divided by your cost. Margin is profit divided by the price. A $1,000 job priced at $1,200 carries a 20% markup and a 16.7% margin — same dollars, two percentages, and only one of them is what your overhead gets paid from.
What markup gives me a 20% margin? 25%. The table on this page converts both ways: divide your target margin by (1 − margin) to get the markup that produces it.
Which one should I price with? Margin. Overhead is a share of revenue, and margin is the share of the price you keep. Shops that price by markup discover the difference at tax time.
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