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Markup vs Margin Calculator

Convert between markup and margin, and price a job from either.

Your measurementsEvery assumption editable01

Everything the job costs you — materials, labor, subs.

Markup is applied to cost. Margin is a share of the price.

Price and profitCalculated live02

Result

$1500price

50% markup is 33.33% margin

Cost
$1000
Markupapplied to cost
50%
Marginshare of the selling price
33.333%
Price
$1500
Gross profit
$500
If the two were confusedhow much the price would be out by
$500

Markup is calculated on cost; margin is calculated on price. A 50% markup on $1,000 gives a $1,500 price and $500 of profit — which is a 33.3% margin, not 50%. The two only converge at zero and diverge steadily from there.

This is the most expensive arithmetic error in the trades. A contractor who needs a 30% margin but applies a 30% markup takes 23% instead, and across a year of jobs that gap is the difference between a profitable business and a busy one that makes nothing.

To convert: markup equals margin divided by one minus margin. So a 30% target margin needs a 42.9% markup, and a 50% target margin needs a 100% markup — doubling the cost.

Markup is calculated on cost. Margin is calculated on price. They are not the same number, they diverge fast, and pricing a business on the wrong one is how a busy contractor works a full year for nothing.

Why use this tool?What it does differently03

Why use this tool?

Both directions

Enter a markup and get the margin, or enter a target margin and get the markup you need.

Shows the cost of confusing them

The price you would have charged if you mixed the two up, and the gap in dollars.

Price and gross profit

Not just the percentages — the actual figures the job turns on.

The conversion rule

Markup equals margin divided by one minus margin. Worth committing to memory.

How this worksThe method04

How this markup vs margin calculator works

Markup is a percentage added to cost; margin is a percentage of the selling price. Adding 50% to a $1,000 cost gives a $1,500 price and $500 of profit — but $500 of $1,500 is a 33.3% margin, not 50%.

The conversion runs both ways. Margin equals markup divided by one plus markup; markup equals margin divided by one minus margin. They agree only at zero and separate steadily from there.

The result shows what the price would have been had the two been confused, because seeing the gap in dollars makes the point far better than the percentages do.

How to use itStep by step05

How to use it

  1. Step 1: Enter your cost

    Everything the job costs you — materials, labor, subcontractors.

  2. Step 2: Choose which you are entering

    A markup you apply, or a margin you are targeting.

  3. Step 3: Read across

    The other percentage, the price and the gross profit.

  4. Step 4: Price on margin

    Margin is what your accounts measure. Markup is only the mechanism for reaching it.

Example usageWorked figures06

Example usage

The classic confusion
A 50% markup on $1,000 gives a $1,500 price — a 33.33% margin. Applying 50% as a margin instead would price it at $2,000, a $500 difference on one job.
Hitting a 30% margin
You need a 42.9% markup, not 30%. A contractor applying 30% takes 23% and wonders where the money went.
A 50% margin
Requires a 100% markup — doubling the cost. Which is why high-margin trades look expensive and are not necessarily making more than they need to.
Frequently asked questionsCommon questions07

Frequently asked questions

What is the difference between markup and margin?

Markup is a percentage of your cost; margin is a percentage of the selling price. A 50% markup produces a 33.3% margin, and the gap widens as the numbers rise.

How do I convert margin to markup?

Divide the margin by one minus the margin. A 30% target margin needs a 42.9% markup; a 50% margin needs a 100% markup.

Which should I price on?

Set your target as a margin, since that is what your accounts and your profitability actually measure, then convert to the markup needed to reach it.

What happens if I confuse them?

You undercharge, consistently. A contractor needing 30% margin who applies a 30% markup earns 23% instead — and across a year of jobs that gap is often the entire profit.

Is a higher markup always better?

Only if you still win the work. The point of the calculation is knowing what margin a given markup actually delivers, so you can price deliberately rather than discover the shortfall at year end.

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