Contractor economics
Markup vs Margin Calculator
Convert cost plus markup, cost plus target margin, or cost plus an existing selling price without confusing markup with margin. See pre-tax selling price, profit and both percentages.
Convert cost, markup, margin and price correctly
Markup uses cost as its denominator. Margin uses selling price.
Markup vs margin
The denominator is the difference.
Markup measures profit against cost. Margin measures the same profit against selling price. Because the denominators differ, equal percentages do not produce the same selling price.
- Profit: selling price − cost
- Markup: profit ÷ cost
- Margin: profit ÷ selling price
- Price from markup: cost × (1 + markup)
- Price from target margin: cost ÷ (1 − margin)
Conversion
A 20% markup is about a 16.67% margin.
If cost is 100 and you add 20% markup, selling price is 120 and profit is 20. That 20 of profit divided by the 120 selling price is about 16.67% margin. A 20% target margin instead requires a selling price of 125, which is a 25% markup on cost.
Target margin pricing
Use division, not a same-number markup.
To price from a target margin, divide cost by one minus the margin. A positive cost can never produce a 100% target margin because the denominator would be zero, so V1 requires target margin to stay below 100%.
Check a selling price
An underpriced sale should stay visibly negative.
Cost + Selling Price mode calculates actual profit, markup and margin from the price you already have. If price is below cost, ProjectFigures preserves the negative percentages and labels the loss instead of clamping it to zero.
Pre-tax boundary
Customer sales tax, VAT or GST stays outside the pricing math.
Selling price means the pre-tax quote or customer subtotal. Enter the cost amount your business normally treats as cost after its own purchase-tax treatment. This utility does not calculate tax or provide tax or accounting advice.
Contractor use
Use this for conversion and checking, not as a pricing benchmark.
ProjectFigures does not prefill an industry markup or recommend a target margin. Risk, scope, overhead, market conditions and business strategy belong to your own pricing decision. This calculator only keeps the arithmetic exact and transparent.
Connected workflow
Use full job costing before converting the final pricing relationship.
Contractor Job Pricingbuilds break-even from materials, true labor cost, other direct costs, contingency and allocated overhead. Use Markup vs Margin when you need a focused conversion or want to check the relationship between that cost basis and a selling price.
Contractor Overhead Recoveryconverts a known business overhead pool into an explicit recovery rate or resolved job amount without treating overhead as profit.Change Order Pricingapplies the same margin-vs-markup discipline to incremental added scope after its break-even cost is built.
FAQ
Markup and margin questions
Is 25% markup the same as 25% margin?
No. A 25% markup on cost 100 gives a selling price of 125 and a 20% margin. A 25% margin on cost 100 requires a selling price of about 133.33 and an equivalent markup of about 33.33%.
What markup or margin should a contractor use?
ProjectFigures does not recommend a universal percentage. The calculator converts the percentage you choose without treating it as an industry benchmark.
Can margin or markup be negative?
In Cost + Selling Price mode, yes. A selling price below cost creates a real modeled loss, so both actual margin and markup may be negative. Target markup and target margin inputs in the pricing modes remain non-negative.
Does changing currency convert my numbers?
No. USD, GBP, CAD and AUD are labels only. ProjectFigures has no FX engine and never changes the numeric values when you change currency.
Pricing arithmetic using your figures — not tax, accounting, financial or guaranteed-profit advice.