Markup vs margin chart for contractors
By the Estimate Templates editorial team · Last updated · Formulas checked against worked examples
Mixing up markup and margin is one of the most common pricing mistakes on estimates: add a 20% markup and you earn a 16.7% margin, not 20%. Use the chart below to convert between the two, or type your own numbers into the calculator. Free to print, share or cite with a link to this page.
Markup and margin calculator
- Price to charge
- $1,333.33
- Gross profit
- $333.33
- Markup
- 33.3%
- Margin
- 25.0%
Markup to margin chart
| Markup on cost | Gross margin | Price multiplier | $1,000 cost sells for |
|---|---|---|---|
| 5.0% | 4.8% | 1.050 | $1,050 |
| 10.0% | 9.1% | 1.100 | $1,100 |
| 15.0% | 13.0% | 1.150 | $1,150 |
| 20.0% | 16.7% | 1.200 | $1,200 |
| 25.0% | 20.0% | 1.250 | $1,250 |
| 30.0% | 23.1% | 1.300 | $1,300 |
| 33.3% | 25.0% | 1.333 | $1,333 |
| 35.0% | 25.9% | 1.350 | $1,350 |
| 40.0% | 28.6% | 1.400 | $1,400 |
| 43.0% | 30.1% | 1.430 | $1,430 |
| 50.0% | 33.3% | 1.500 | $1,500 |
| 60.0% | 37.5% | 1.600 | $1,600 |
| 66.7% | 40.0% | 1.667 | $1,667 |
| 75.0% | 42.9% | 1.750 | $1,750 |
| 100.0% | 50.0% | 2.000 | $2,000 |
Margin to markup chart
| Target gross margin | Markup needed | Divide cost by | $1,000 cost sells for |
|---|---|---|---|
| 5.0% | 5.3% | 0.950 | $1,053 |
| 10.0% | 11.1% | 0.900 | $1,111 |
| 15.0% | 17.6% | 0.850 | $1,176 |
| 20.0% | 25.0% | 0.800 | $1,250 |
| 25.0% | 33.3% | 0.750 | $1,333 |
| 30.0% | 42.9% | 0.700 | $1,429 |
| 33.3% | 49.9% | 0.667 | $1,499 |
| 35.0% | 53.8% | 0.650 | $1,538 |
| 40.0% | 66.7% | 0.600 | $1,667 |
| 45.0% | 81.8% | 0.550 | $1,818 |
| 50.0% | 100.0% | 0.500 | $2,000 |
The formulas
- Markup = (Price - Cost) / Cost
- Margin = (Price - Cost) / Price
- Margin from markup = Markup / (1 + Markup)
- Markup from margin = Margin / (1 - Margin)
- Price for a target margin = Cost / (1 - Margin)
Worked example: pricing a remodel estimate
Your direct costs for a bathroom remodel (labor, materials, subcontractors, permit) come to $12,000. Your books say overhead runs at 15% of sales and you want 10% net profit, so you need a 25% gross margin. Price = $12,000 / 0.75 = $16,000. That's a 33.3% markup. If you had simply added 25% to cost you would have quoted $15,000, leaving $1,000 less to cover overhead and profit.
Put the result into the free estimate template either as marked-up line prices or as a separate overhead and profit line, and keep the method the same on every estimate so customers comparing bids see consistent numbers.
General business information, not accounting or tax advice. Overhead and profit targets depend on your own figures.