# Markup and Margin Calculator

Markup is profit divided by cost; margin is profit divided by selling price. To convert markup to margin, divide markup by 1 plus markup. To convert margin to markup, divide margin by 1 minus margin. A 50% markup on a $2,400 job gives a $3,600 price and only a 33.3% margin.

## Key takeaways

- Markup = (price − cost) ÷ cost. Margin = (price − cost) ÷ price. Same dollars of profit, different base.
- Markup is always the bigger number: a 50% markup is a 33.3% margin, and a 50% margin needs a 100% markup.
- Set prices with margin when you have a target, because overhead and profit are budgeted as a share of revenue.
- Price = cost ÷ (1 − target margin). Never price by adding the margin percentage to cost.

## What is the difference between markup and margin?

Markup and margin describe the same dollars of profit measured against different numbers. Markup compares profit to what the job cost you. Margin compares profit to what the customer paid. On a $2,400 job sold for $3,600, the $1,200 profit is a 50% markup but a 33.3% margin.

That gap is where contractors lose money. An owner who wants 50% of every invoice left over after job costs, then adds 50% to cost, ends up with a third. Your [profit and loss statement](https://www.brix.so/learn/profit-and-loss-statement) reports [gross margin](https://www.brix.so/learn/gross-margin) as a share of revenue, so that's the number your prices have to hit. See [markup vs. margin](https://www.brix.so/learn/markup-vs-margin) for the full explanation.

**Formulas**

```
Markup = (P − C) ÷ C    Margin = (P − C) ÷ P    Margin = M ÷ (1 + M)    Markup = G ÷ (1 − G)
```

Where:
- P = selling price
- C = total job cost: materials, burdened labor, subs, permits, disposal
- M = markup as a decimal (50% = 0.50)
- G = gross margin as a decimal (40% = 0.40)

## How to calculate markup and margin

1. **Add up your full cost.** Include materials, labor at its burdened rate (wage plus payroll taxes, workers' comp and benefits), subcontractors, permits, equipment rental and dump fees. Use the [labor burden calculator](https://www.brix.so/tools/labor-burden-calculator) if you only know the wage.
2. **To price from a target margin, divide.** Price = cost ÷ (1 − margin). For a 40% margin on a $1,000 cost: $1,000 ÷ 0.60 = $1,666.67.
3. **To price from a markup, multiply.** Price = cost × (1 + markup). A 40% markup on $1,000 is $1,400, which is only a 28.6% margin.
4. **To check a price you already quoted, work backwards.** Subtract cost from price to get gross profit. Divide by cost for markup and by price for margin.

> **Worked example**
>
> A plumbing job costs you $2,400 in materials, burdened labor and a permit. You mark it up 50%: $2,400 × 1.5 = **$3,600**.
>
> Gross profit is $3,600 − $2,400 = $1,200. That's a 50% markup ($1,200 ÷ $2,400) but a **33.3% margin** ($1,200 ÷ $3,600).
>
> If your budget needs a 50% gross margin, the price has to be $2,400 ÷ 0.50 = **$4,800**, a 100% markup. Quoting $3,600 leaves $1,200 on the table on this one job.

## Markup to margin chart

**Markup and the gross margin it produces**

| Markup | Margin | Price multiplier | Price on a $1,000 cost |
| --- | --- | --- | --- |
| 10% | 9.1% | 1.1× | $1,100 |
| 15% | 13.0% | 1.15× | $1,150 |
| 20% | 16.7% | 1.2× | $1,200 |
| 25% | 20.0% | 1.25× | $1,250 |
| 30% | 23.1% | 1.3× | $1,300 |
| 40% | 28.6% | 1.4× | $1,400 |
| 50% | 33.3% | 1.5× | $1,500 |
| 60% | 37.5% | 1.6× | $1,600 |
| 75% | 42.9% | 1.75× | $1,750 |
| 100% | 50.0% | 2× | $2,000 |
| 150% | 60.0% | 2.5× | $2,500 |
| 200% | 66.7% | 3× | $3,000 |
| 300% | 75.0% | 4× | $4,000 |

_Calculated: margin = markup ÷ (1 + markup)._

## Margin to markup chart

**Markup you need to hit a target gross margin**

| Target margin | Markup needed | Divide cost by | Price on a $1,000 cost |
| --- | --- | --- | --- |
| 10% | 11.1% | 0.9 | $1,111.11 |
| 15% | 17.6% | 0.85 | $1,176.47 |
| 20% | 25.0% | 0.8 | $1,250.00 |
| 25% | 33.3% | 0.75 | $1,333.33 |
| 30% | 42.9% | 0.7 | $1,428.57 |
| 35% | 53.8% | 0.65 | $1,538.46 |
| 40% | 66.7% | 0.6 | $1,666.67 |
| 45% | 81.8% | 0.55 | $1,818.18 |
| 50% | 100.0% | 0.5 | $2,000.00 |
| 60% | 150.0% | 0.4 | $2,500.00 |

_Calculated: markup = margin ÷ (1 − margin). Margin can never reach 100%._

## Markup and margin by trade

Trades use markup in different places. HVAC and plumbing shops mark up equipment and parts on top of a labor rate, roofers mark up a whole job, and cleaners rarely mark up supplies at all because labor is most of the cost. The examples below are illustrative, not industry averages, and show what each markup really keeps.

**Illustrative markups and the margin they produce**

| Trade | Example cost | Your cost | Markup | Price | Margin |
| --- | --- | --- | --- | --- | --- |
| HVAC | Condenser and coil for a system replacement | $4,200 | 35% | $5,670 | 25.9% |
| Plumbing | 50-gallon water heater, fittings and venting | $950 | 50% | $1,425 | 33.3% |
| Electrical | 200-amp panel, breakers and wire | $1,100 | 40% | $1,540 | 28.6% |
| Roofing | Shingles, underlayment and flashing for a 25-square roof | $4,800 | 30% | $6,240 | 23.1% |
| Landscaping | Plants, mulch and edging for a front bed | $600 | 100% | $1,200 | 50.0% |
| Cleaning | Supplies for a move-out deep clean | $40 | 200% | $120 | 66.7% |

_Example numbers, not benchmarks. Use your own costs and your own overhead and profit targets._

Low-cost parts usually carry a higher markup than big-ticket equipment: a 100% markup on a $40 part adds $40, while the same markup on a $4,200 condenser would price you out of the bid. Many service shops use a sliding parts scale for that reason. [Flat-rate pricing](https://www.brix.so/tools/flat-rate-pricing-calculator) builds the scale into each task price.

## Common markup and margin mistakes

- **Treating markup and margin as the same number.** "We run 30%" means nothing until you say which. A 30% markup is a 23.1% margin.
- **Marking up materials only.** If labor goes out at cost, the markup on parts has to carry all of your overhead and profit. Labor needs its own margin; see the [contractor hourly rate calculator](https://www.brix.so/tools/contractor-hourly-rate-calculator).
- **Using raw wages as labor cost.** Payroll taxes, workers' comp, benefits and paid time off add a large share on top of the wage. Use the burdened rate.
- **Forgetting overhead.** Gross margin has to pay rent, trucks, office staff, insurance and software before any profit is left. Find yours with the [overhead rate calculator](https://www.brix.so/tools/overhead-rate-calculator).
- **Discounting off the price, not the margin.** A 10% discount on a job priced at a 33% margin cuts gross profit by about 30%, not 10%.

Want a full job price, not just a conversion? The [job pricing calculator](https://www.brix.so/tools/job-pricing-calculator) builds a price from labor hours, materials, overhead and a target profit.

BRIX builds quotes on site from your own prices and costs, then syncs invoices and payments to QuickBooks so you can see the margin you actually earned on each job.

- [Quotes and estimates](https://www.brix.so/features/quotes-estimates): Builds accurate quotes on site and follows up on every open estimate.
- [QuickBooks sync](https://www.brix.so/integrations/quickbooks): Syncs customers, invoices and payments with QuickBooks so the books match the jobs.
- [Bookkeeping and tax help](https://www.brix.so/features/bookkeeping-taxes): Keeps expenses categorized, tracks 1099 subcontractors and sales tax, and reminds you of quarterly estimated tax dates. BRIX does not file taxes or give tax advice.

## Frequently asked questions

### How do I convert markup to margin?

Divide the markup by 1 plus the markup. A 50% markup is 0.50 ÷ 1.50 = 33.3% margin, and a 100% markup is 1.00 ÷ 2.00 = 50% margin. The chart above lists common conversions.

### How do I convert margin to markup?

Divide the margin by 1 minus the margin. A 40% margin needs 0.40 ÷ 0.60 = 66.7% markup. A 50% margin needs a 100% markup, which is why doubling your cost only gets you to a 50% margin.

### Is a 50% markup the same as a 50% margin?

No. A 50% markup turns a $100 cost into a $150 price, which is a 33.3% margin. A 50% margin needs a $200 price on the same $100 cost, which is a 100% markup.

### How do I calculate selling price from cost and margin?

Divide cost by 1 minus the margin. For a $2,400 cost at a 45% margin, the price is $2,400 ÷ 0.55 = $4,363.64. Multiplying cost by 1.45 instead would give $3,480, which is only a 31% margin.

### What markup should a contractor use?

Work backwards from your overhead and profit target rather than copying another shop's markup. If overhead runs 25% of revenue and you want 10% net profit, you need about a 35% gross margin on the job, which is a 53.8% markup on total job cost.

### Should I quote margin or markup to my team?

Give estimators a target margin and a cost divisor (for example, divide cost by 0.60 for a 40% margin). Margin ties straight to your P&L, and a divisor is as fast to use as a markup multiplier without the conversion mistake.

### Why is margin always lower than markup?

Both use the same dollars of profit, but margin divides by the selling price, which is always larger than cost when you make a profit. The bigger the markup, the wider the gap between the two numbers.

## Related

- [Markup vs. Margin: What's the Difference?](https://www.brix.so/learn/markup-vs-margin)
- [What Is Markup?](https://www.brix.so/learn/markup)
- [What Is Gross Margin?](https://www.brix.so/learn/gross-margin)
- [Job Pricing Calculator for Contractors](https://www.brix.so/tools/job-pricing-calculator)
- [Flat Rate Pricing Calculator](https://www.brix.so/tools/flat-rate-pricing-calculator)
- [How Much to Charge per Hour as a Contractor](https://www.brix.so/tools/contractor-hourly-rate-calculator)
- [Overhead Rate Calculator](https://www.brix.so/tools/overhead-rate-calculator)
- [How to Price Contracting Jobs for Profit: The Complete Guide](https://www.brix.so/guides/how-to-price-jobs)
- [Maintenance Agreement Pricing Calculator](https://www.brix.so/tools/maintenance-agreement-calculator)
- [Labor Burden Calculator](https://www.brix.so/tools/labor-burden-calculator)

---
Written by BRIX Editorial Team. Last updated 2026-10-12.
Canonical: https://www.brix.so/tools/markup-margin-calculator