CALCULATORS · JOB PRICING
Markup Calculator for Contractors: Markup vs Margin
Markup and margin describe the same profit against two different bases, and mixing them up is how a job priced for a 40% markup ends up with a 28.57% margin. Convert between them, price a part from its cost, or build a whole job price from parts, labor hours and the margin you need to keep.
How to use the calculator
- Pick the question you are answering: convert one number into the other, price a part, or price a whole job.
- Type percents as whole numbers. A 40% margin is 40, not 0.4.
- Read the answer under the form. It updates as you type, and an empty field asks for a value instead of counting as zero.
- For a job, enter parts cost, the hours, what an hour of labor costs you (wages plus burden, not your billing rate), and the margin you want to keep.
Convert markup and margin
Markup to margin
Margin to markup
Price from cost
At a markup
At a margin
Price a job
If the parts and labor hours are both zero there is no cost, so there is no markup to report.
The formulas
Margin is profit divided by price. Markup is profit divided by cost.
- Markup to margin: margin = markup ÷ (1 + markup)
- Margin to markup: markup = margin ÷ (1 − margin)
- Price at a markup: price = cost × (1 + markup)
- Price at a margin: price = cost ÷ (1 − margin)
- Job price: cost = parts + labor hours × labor cost per hour; price = cost ÷ (1 − margin); profit = price − cost
Margin stops short of 100%. At 100% the denominator (1 − margin) is zero, so the calculator reports that no price exists instead of returning a number.
Worked example: a repair priced at a 40% margin
A repair uses $420.00 in parts and 3 hours of labor that cost $95.00 an hour, so the job costs $705.00. To keep a 40.00% margin, the price is $705.00 ÷ (1 − 0.40), or $1,175.00.
| Parts | $420.00 |
|---|---|
| Labor (3 h × $95.00) | $285.00 |
| Total cost | $705.00 |
| Price at a 40.00% margin | $1,175.00 |
| Profit | $470.00 |
| Equivalent markup | 66.67% |
Marking the same $705.00 up by 40% gives $987.00 instead. That leaves $282.00 of profit, a 28.57% margin, which is why a margin target and a markup target of the same number are different prices.
Markup to margin table
Find the markup you use today and read across to the margin it actually keeps.
| Markup | Margin |
|---|---|
| 10.00% | 9.09% |
| 15.00% | 13.04% |
| 20.00% | 16.67% |
| 25.00% | 20.00% |
| 30.00% | 23.08% |
| 40.00% | 28.57% |
| 50.00% | 33.33% |
| 60.00% | 37.50% |
| 75.00% | 42.86% |
| 100.00% | 50.00% |
Frequently asked questions
What is the difference between markup and margin?
Both describe profit, measured against different amounts. Markup divides profit by cost. Margin divides profit by price. A part that costs $100 and sells for $125 carries a 25% markup and a 20% margin.
Why is a 50% markup only a 33.33% margin?
The profit is measured against a larger number. A $100 cost marked up 50% sells for $150, and the $50 of profit is one third of $150, not one half. The same gap runs through the whole table: margin is always lower than markup.
Why can a margin never reach 100%?
A 100% margin means cost is none of the price, so any job with a real cost would need an unlimited price. The calculator says so instead of returning a number. Markup has no such limit, and a 100% markup is only a 50% margin.