Markup to Margin Calculator for Contractors (Free)

Convert markup to margin and back, see the price that hits your target margin, and find out why a 20% markup is only 16.7% margin.

Obra shows the margin you actually achieve on every job, from the contract value and every recorded cost — not the one on the estimate.

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How it works

Markup and margin are different numbers wearing the same percent sign. Markup is measured against cost: what you add on top. Margin is measured against price: the share of the client's money that isn't cost. The same job is a 25% markup and a 20% margin at once.

margin = markup ÷ (1 + markup) · markup = margin ÷ (1 − margin)

To price a job for a target margin, divide the cost by (1 − margin). Multiplying by (1 + margin) is the classic mistake: cost $10,000, target 20% margin, ×1.20 gives $12,000 — and quietly hands the client your missing $500. ÷0.80 gives the right $12,500.

The conversion table

Markup (on cost)	Margin (of price)
10%	9.1%
15%	13.0%
20%	16.7%
25%	20.0%
33%	25.0%
50%	33.3%
67%	40.0%
100%	50.0%

The margin you price for assumes the job costs what you estimated. Labor runs over, a supply run never gets a receipt, an extra never becomes a change order — and the 20% on the estimate becomes 12% in the bank. The only margin that means anything is the achieved one, and it needs every cost tracked.

Questions

01 Is a 20% markup the same as a 20% margin? +

No. A 20% markup on cost is a 16.7% margin of price. To keep 20% of the price, you need a 25% markup. The two numbers only meet at zero.

02 What markup should a contractor charge? +

There is no universal number — it depends on your overhead and your volume. Add up a year of overhead, divide by your realistic revenue, add the net profit you want, and that total is the margin your markup must produce. Our overhead calculator walks through it.

03 How do I convert margin to markup? +

Divide the margin by one minus the margin. A 30% margin is 0.30 ÷ 0.70, a 42.9% markup. Or type the margin into the calculator above and read the markup.

04 Does the margin here include overhead? +

This is gross margin: price minus the job's direct costs. Overhead — the truck, insurance, your unbilled hours — comes out of it afterwards. What's left after overhead is net profit.

Free download

Not ready for an app? Start with our free Excel template.

A ready-made spreadsheet to track costs and income per project — with categories and the totals already set up.