Contractor Profit Calculator
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Markup vs margin calculator for contractors
Convert markup to true profit margin, calculate a selling price from target margin, or reverse an existing price before quoting.
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Markup is not the same as margin
Markup divides profit by cost. Margin divides profit by selling price. A 25% markup on $100 creates a $125 price and a 20% margin.
How it works
- Enter the cost you need to recover.
- Choose markup, target margin, or reverse-price mode.
- Review selling price, profit, markup, and margin.
Markup and margin formulas
- Selling price by markup = cost × (1 + markup).
- Selling price by margin = cost ÷ (1 - target margin).
- Markup = profit ÷ cost. Margin = profit ÷ selling price.
Common contractor pricing mistakes
- Treating a 20% markup as a 20% margin.
- Applying markup before confirming every job cost.
- Using the percentage result without adding overhead, contingency, and tax.
Frequently asked questions
What markup produces a 20% margin?
A 25% markup produces a 20% margin. A $100 cost becomes a $125 selling price with $25 profit.
Why is margin lower than markup?
Markup divides profit by cost. Margin divides profit by the larger selling price, so its percentage is lower.
How do I calculate price from target margin?
Divide cost by one minus the target margin as a decimal. For a 20% margin, divide cost by 0.80.
Can this replace a full contractor quote?
No. Use the contractor profit calculator to include labor, overhead, contingency, tax, and all job costs.
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