Markup Calculator: Price, Profit & Margin for Contractors
Markup is how much you add to your cost to set a price. Get it wrong, and a job that looks profitable on paper barely covers your overhead. This markup calculator turns cost and markup into a selling price, shows the real profit margin, prices a contractor or rehab bid with overhead and profit, and converts the margin you want into the markup you need.
Markup calculator
What is markup?
Markup is the amount added to the cost of a product or job, expressed as a percentage of that cost: markup = (price − cost) ÷ cost × 100. If materials and labor cost $40,000 and you charge $50,000, the markup is $10,000 ÷ $40,000 = 25%.
Markup vs. margin
Margin uses the same profit but divides by the price: margin = (price − cost) ÷ price × 100. In the example, $10,000 ÷ $50,000 = 20%. Because the price is always bigger than the cost, margin is always smaller than markup. Mixing them up is one of the most common pricing mistakes: a contractor who "adds 20%" to hit a 20% margin actually earns about 16.7%.
Margin to markup conversion
To hit a target margin, use markup = margin ÷ (100 − margin) × 100:
| Margin you want | Markup you need |
|---|---|
| 10% | 11.1% |
| 15% | 17.6% |
| 20% | 25.0% |
| 25% | 33.3% |
| 30% | 42.9% |
| 40% | 66.7% |
| 50% | 100.0% |
Pricing a contractor or rehab bid
Contractors usually build a price in layers: the direct job cost (materials, labor and subcontractors), then overhead (office, insurance, vehicles, tools, licenses) and then profit. A widely quoted convention is "10 and 10": 10% overhead and 10% profit. Applied in sequence, the total markup is not 20%:
- Job cost: $22,000 materials + $14,000 labor + $9,000 subcontractors = $45,000.
- Overhead at 10%: $4,500.
- Profit at 10% of cost plus overhead: $4,950.
- Bid: $54,450, a total markup of 21.0% on job cost and a margin of 17.4% on the bid.
Overhead is a real cost of staying in business, so the profit you keep is the profit line, not the whole markup. If your overhead actually runs 15% of revenue, a 10-and-10 bid leaves almost nothing.
Markup for real estate investors
If you flip or renovate, you are on the other side of these bids. Knowing how contractors price helps you check a quote: ask for materials, labor, subcontractors and the overhead-and-profit line separately. A bid with a total markup far above the 20%–30% range for a straightforward job deserves a second quote; one far below may not cover the contractor's costs, which can mean change orders later. Feed the final number into the rehab budget of the ARV calculator and the hard money loan calculator.
Frequently Asked Questions
How do you calculate markup?
Subtract the cost from the selling price, divide by the cost and multiply by 100. To find a price from a markup, multiply the cost by one plus the markup percentage: a $40,000 cost with a 25% markup sells for $50,000.
What is the difference between markup and margin?
Both use the same profit. Markup divides it by the cost; margin divides it by the selling price. A 25% markup equals a 20% margin, and a 50% markup equals a 33.3% margin.
How do I convert margin to markup?
Markup equals margin divided by (100 minus margin), times 100. For a 20% margin you need a 25% markup; for a 30% margin, about 42.9%.
What is a typical contractor markup?
A common convention is 10% overhead plus 10% profit, about 21% in total when profit is applied on cost plus overhead. Many contractors mark up more, often 20% to 35% or higher on smaller jobs, depending on their real overhead and risk.
Is a 50% markup the same as a 50% margin?
No. A 50% markup gives a 33.3% margin. To earn a 50% margin you need a 100% markup, which doubles the cost.
Sources
- Standard markup and gross margin definitions used in accounting and pricing.
- The "10 and 10" overhead-and-profit convention as widely described in U.S. construction estimating.