Markup vs. Margin Calculator
Enter your job cost and either the markup you apply or the margin you want. Get the price to charge, your profit, and both percentages — instantly, in your browser.
Markup is profit as a percent of cost; margin is profit as a percent of price. A 20% markup is only a 16.7% margin — mixing them up is one of the most common ways contractors underprice a job.
Markup is not margin
Markup measures profit against your cost. Margin measures the same profit against the price you charge. They answer different questions, and confusing them is one of the fastest ways a contractor underprices work. Use the table below to convert between the two at a glance.
| If your markup is… | …your gross margin is |
|---|---|
| 10% | 9.1% |
| 15% | 13% |
| 20% | 16.7% |
| 25% | 20% |
| 30% | 23.1% |
| 35% | 25.9% |
| 40% | 28.6% |
| 50% | 33.3% |
| 67% | 40% |
| 100% | 50% |
Formula: margin = markup ÷ (1 + markup). Reverse: markup = margin ÷ (1 − margin).
Markup & margin FAQ
What is the difference between markup and margin?
Markup is profit expressed as a percentage of your cost. Margin is that same profit expressed as a percentage of the price you charge. Because the denominators differ, the two numbers are never equal — for example, a 20% markup equals only a 16.7% gross margin.
How do I convert markup to margin?
Margin = markup ÷ (1 + markup). For a 25% markup: 0.25 ÷ 1.25 = 0.20, or a 20% margin. To go the other way, markup = margin ÷ (1 − margin).
What markup should a contractor use?
It depends on your overhead, risk, and market — but many small contractors need a markup well above 20% just to net a healthy margin after overhead. The key is to price from the margin you actually need to keep, then back into the markup, rather than guessing a markup and hoping.
Why do contractors lose money confusing the two?
If you need a 30% margin but apply a 30% markup, you only keep about a 23% margin — you have quietly given away roughly a quarter of your intended profit on every job. Over a year of work, that gap is often the difference between a profitable and an unprofitable company.
Stop pricing jobs by hand
CMDBLD applies your markups, overhead, and labor burden automatically on every AI-built estimate — so the right margin is baked in, not guessed.