Markup vs Margin Calculator
Enter a job cost and any one of markup, margin, or sell price to fill in the rest and see your profit.
| Markup | Margin |
|---|---|
| 10% | 9.1% |
| 15% | 13% |
| 20% | 16.7% |
| 25% | 20% |
| 30% | 23.1% |
| 50% | 33.3% |
| 100% | 50% |
Assumptions
Cost is everything you pay to build the job: labor with burden, materials, subcontractors, and job-site costs. Sales tax is not included. Prices round to the cent. The page opens with a $40,000.00 job at a 25% markup.
Use it to price a job, a change order, or a cost-plus fee. Updated October 2026. Results are estimates, not financial, legal, lending, or tax advice. See all free contractor tools.
Markup and margin, in plain English
Markup is profit as a share of your cost. Margin is profit as a share of the sell price. Both use the same dollars of profit, but margin divides by a bigger number, so it is always the smaller percentage when the job makes money.
The formulas, with the example job
| 1 | Sell priceCost × (1 + markup) | $40,000.00 × 1.25 =$50,000.00 |
|---|---|---|
| 2 | ProfitSell price − cost | $50,000.00 − $40,000.00 =$10,000.00 |
| 3 | MarginProfit ÷ sell price, or markup ÷ (1 + markup) | $10,000.00 ÷ $50,000.00 =20% |
When to price with markup
Use markup when you build a price up from cost: an estimate, a change order, or a cost-plus fee. Each cost line gets the same percentage, so the math is simple and the client can check it. Buildplus cost-plus software applies your builder fee to project expenses as you invoice.
When to plan with margin
Use margin when you set targets for the year. Your overhead and net profit are shares of revenue, so your target is a margin. Convert that margin to a markup before you price the next job.
Cost-plus fees are markup
On a cost-plus job, the fee is a percentage of cost, so it is a markup. A 20% fee on $100,000 of cost is $20,000 on a $120,000 bill. That is a 16.7% margin, not 20%. Bill the fee with the cost-plus invoice template, or compare it with a fixed-price markup in the cost plus vs fixed price calculator.
Common mistakes
- Pricing with a 20% markup and planning for 20% of revenue as profit. You keep a 16.7% margin.
- Converting a margin target to a price with cost × (1 + margin). Divide by (1 − margin) instead.
- Leaving labor burden out of cost. Payroll taxes, insurance, and benefits are cost, so a markup on bare wages is too low.
- Stacking markups. A 10% markup on a sub who already marked up 10% is not 20% on the base cost. It is 21%.
Before Buildplus I would have to send my subcontractors multiple payments spread out over a couple of days to avoid hitting electronic transfer limits.
Now I can send one payment and be done. That convenience combined with the fact that payments are automatically tracked back to the right subcontract makes Buildplus a very elegant solution.
Cliff Kahan
Property Projects LLCFAQs
What is the difference between markup and margin?
Markup is profit divided by cost. Margin is profit divided by the sell price. On a job that costs $40,000 and sells for $50,000, the $10,000 profit is a 25% markup and a 20% margin.
How do I convert markup to margin?
Divide the markup by one plus the markup. A 25% markup is 0.25 / 1.25, which is a 20% margin. To go the other way, divide the margin by one minus the margin: a 20% margin is 0.20 / 0.80, which is a 25% markup.
Is a cost-plus fee a markup or a margin?
A cost-plus fee is a markup, because it is a percentage of cost. A 20% fee gives a 16.7% margin on the total bill. If you need a 20% margin, the fee must be 25%.
What markup should a contractor use?
Start from the margin your business needs to cover overhead and profit, as a share of revenue. Then convert that margin to a markup. If overhead is 10% of revenue and you want 10% profit, you need a 20% margin, which is a 25% markup.
Why does my profit look lower than my markup?
Profit on your books is measured against revenue, which is margin. If you price with a 20% markup and expect 20% of revenue as profit, you will come up short by about 3.3 points on every job.
Can margin be 100% or more?
No. Margin is profit divided by price, and the price includes your cost, so margin stays under 100% for any job with a cost. Markup has no upper limit: a 100% markup doubles the cost and is a 50% margin.
What is Buildplus?
Buildplus is the payments, expenses and invoicing platform built for contractors running cost-plus jobs. Every payment, swipe and reimbursable expense stays tied to the project it belongs to.
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