Markup vs margin calculator
A 20% markup is a 16.7% margin. Work out the price to quote, the margin it actually earns, and the markup you need to hit the margin you want.
You add a percentage on top of cost.
- Price to quote
- CA$12,000
- Profit
- CA$2,000
- Markup
- 20%
- Margin
- 16.7%
A 20% markup is a 16.7% margin. They are not the same number, and quoting as though they are is how a job that looked profitable comes in thin.
| If you add this markup | you earn this margin | to earn that margin, mark up |
|---|---|---|
| 10% | 9.1% | 11.1% |
| 15% | 13% | 17.6% |
| 20% | 16.7% | 25% |
| 25% | 20% | 33.3% |
| 30% | 23.1% | 42.9% |
| 40% | 28.6% | 66.7% |
| 50% | 33.3% | 100% |
| 60% | 37.5% | 150% |
| 75% | 42.9% | 300% |
| 100% | 50% | — |
Cost here means your cost for the job — labour, materials and subcontracts. Overhead and tax sit on top of it, so a healthy markup on direct cost is not the same as a healthy business.
Take the worksheet to the job
The same arithmetic as a spreadsheet you keep: fourteen cost codes to price by line, one cell for the margin you need, and the markup, price and gross profit worked out from it. The conversion table is on the sheet, so the mistake is hard to make twice.
Excel / Google Sheets · no sign-up
What the mistake costs on a real job
Three jobs, each priced twice: once by adding the target percentage to cost, and once by pricing so the target is the margin you keep. Same intended profit, different cheque.
| Job | Direct cost | Target margin | Added to cost instead | Priced for the margin | Left on the table |
|---|---|---|---|---|---|
| Deck build | $9,500 | 25% | $11,875earns 20.0% | $12,66733.3% markup | $792 |
| Kitchen renovation | $48,000 | 18% | $56,640earns 15.3% | $58,53722.0% markup | $1,897 |
| Framing package, custom home | $210,000 | 12% | $235,200earns 10.7% | $238,63613.6% markup | $3,436 |
Direct cost means labour, materials and subcontracts for that job. Overhead and tax sit on top, so the right-hand price is the floor, not the answer. Check how PST applies to construction labour and materials where you work — it differs by province.
Markup and margin, answered
- What is the difference between markup and margin?
- Markup is a percentage of your cost. Margin is a percentage of the price you charge. Because the price is the larger number, the margin is always the smaller percentage: a 20% markup is a 16.7% margin, and a 50% markup is a 33.3% margin.
- How do I convert markup to margin?
- Margin = markup / (100 + markup). A 25% markup gives 25 / 125 = 20% margin. Going the other way, markup = margin / (100 - margin), so a 20% margin needs a 25% markup.
- What markup do I need for a 20% margin?
- 25%. This is the conversion contractors most often get wrong — adding 20% to cost to chase a 20% margin leaves you at 16.7%, which is a quarter of the intended profit missing on every job.
- Should contractors price on markup or margin?
- Quote using markup, because it is applied to a cost you actually know. Judge the business on margin, because that is the share of revenue you keep. Problems start when the two are treated as the same number.
- Does this include overhead and tax?
- No. Cost here means the direct cost of the job — labour, materials and subcontracts. Overhead and tax sit on top, so a healthy markup on direct cost is not by itself a healthy business.
Stop doing this per quote
BuildersBridge applies your markup on every estimate line, shows the resulting margin before the quote goes out, and carries the approved number through to the job budget.
Related: job costing · estimating software · ROI calculator