Contractor Markup & Margin Calculator
Charge this price
$3,750.00
- Job cost
- $2,500.00
- Gross profit
- $1,250.00
- Markup on cost
- 50.0%
- Gross margin on price
- 33.3%
Gross profit still has to cover overhead. If you don't know your overhead recovery number, run the overhead recovery calculator next — pricing at 20% markup because 'that's standard' is how shops lose money on busy years.
How this calculator works — the formula
price = cost × (1 + markup%)
margin% = (price − cost) ÷ price · markup% = margin% ÷ (1 − margin%)
Worked example: a $2,500 job cost with 50% markup sells for $3,750. Gross profit is $1,250 — which is 33.3% of the $3,750 price. If you wanted a true 50% margin, the price would need to be $5,000 (a 100% markup).
Questions contractors actually ask
What is the difference between markup and margin?
Markup is profit as a percentage of what the job costs you; margin is profit as a percentage of what you charge. The same dollar profit is always a bigger markup number than margin number — 50% markup = 33.3% margin, 100% markup = 50% margin.
What markup should a contractor charge?
Enough to cover overhead AND leave net profit — for most trades shops that lands between 35% and 75% markup on direct costs, with remodel/specialty work higher. The honest answer comes from your own overhead recovery number plus your profit target, not an industry rule of thumb.
Why do contractors lose money using margin math wrong?
The classic mistake is multiplying cost by (1 + desired margin). Pricing a $10,000-cost job for a '25% margin' as $12,500 actually delivers only 20% margin — a $625 giveaway on one job. Divide by (1 − margin) instead: $10,000 ÷ 0.75 = $13,333.
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