Markup vs Margin Calculator

This is one of the most common and costly mistakes in trade pricing. Markup is calculated as a percentage of your cost. Margin is calculated as a percentage of your selling price. When you apply a 50 percent markup to a $1,000 job, you charge $1,500. That produces a profit of $500 — which is a 33.3 percent margin, not 50 percent.

If your business goal is a 30 percent profit margin but you are using markup to price, you need to apply a 42.9 percent markup to get there. Most contractors who price by doubling their costs — a 100 percent markup — are actually earning a 50 percent margin. That sounds fine until you account for overhead and tax, at which point the real take-home is much lower.

The reverse mode on this calculator solves the problem the other direction. You tell it your target margin — say 35 percent — and it shows you the exact markup percentage to apply to your costs to land at that margin. No mental math required.

For most residential handyman and light remodeling work, a gross margin of 30 to 40 percent is considered sustainable. Below 20 percent, there is almost no buffer for job overruns, callbacks, slow weeks, or equipment failures. Above 50 percent can make you uncompetitive in most markets, though specialty or licensed trade work may justify it.

These numbers refer to gross margin — what remains after materials and direct labor, before overhead and taxes. Your net margin after those deductions will be lower. This is exactly why the Profit Calculator includes an overhead field: to give you a complete picture before you commit to a price.