Free tool
Contractor markup calculator
Enter what the job costs you and the markup or margin you want. See the price, the gross profit, and why 20% markup isn't 20% margin.
A 25% markup is a 20% margin. To actually keep 25% of the price, mark up 33.3%.
Markup vs. margin, in one sentence
Markup is measured against your cost. Margin is measured against your price. The dollars are identical; the percentage is smaller when you divide by the bigger number.
| Markup on cost | Margin of price |
|---|---|
| 10% | 9.1% |
| 15% | 13.0% |
| 20% | 16.7% |
| 25% | 20.0% |
| 33.3% | 25.0% |
| 50% | 33.3% |
| 100% | 50.0% |
The trap: you decide the job should keep 20%, you mark the cost up 20%, and you keep 16.7%. On a $60,000 remodel that's $2,000 you planned on and never see. Pick the margin you want first, then use the markup that gets you there.
Questions about markup
What's the difference between markup and margin?
Markup is profit divided by cost; margin is profit divided by price. A job that costs $10,000 and sells for $12,500 has a 25% markup but a 20% margin. The same dollars, two different percentages — and most contractors who think they're keeping 20% are marking up 20% and keeping 16.7%.
What markup should a contractor use?
Enough to cover overhead and still leave a profit. Overhead (truck, insurance, phone, office, your time not on the tools) commonly runs 10–20% of revenue, so a 25–35% markup on job cost is a usual range for remodelers and specialty trades, and higher on small jobs where overhead is a bigger share. Your own numbers beat any rule of thumb.
Is gross profit the same as what I take home?
No. Gross profit is price minus the job's direct costs. Overhead comes out of gross profit, and what's left is net profit. A job with a healthy gross margin can still lose money once overhead is counted.
How does BuildRTX use this?
BuildRTX estimates from your real labor, material and sub costs and shows the margin on every estimate before you send it — then tracks the actual profit as the job runs. The first 3 days are free.
Stop doing this on a napkin.
BuildRTX estimates from your real costs and shows the margin on every job before you send it.