ProfitBidMarkup vs Margin Calculator
Markup and margin are not the same number. Markup is calculated on cost; margin is calculated on the sell price. Convert either way below: a 30% markup is a 23.08% margin, and to keep a 30% margin you need a 42.86% markup.
Markup to margin reference table
| Markup on cost | Margin kept | Price on $10,000 cost |
|---|---|---|
| 10% | 9.09% | $11,000 |
| 20% | 16.67% | $12,000 |
| 25% | 20.00% | $12,500 |
| 30% | 23.08% | $13,000 |
| 33.33% | 25.00% | $13,333 |
| 42.86% | 30.00% | $14,286 |
| 50% | 33.33% | $15,000 |
| 66.67% | 40.00% | $16,667 |
| 100% | 50.00% | $20,000 |
The formulas
Margin = Markup / (1 + Markup) and Markup = Margin / (1 − Margin), using decimals. Sell price from a target margin is Cost / (1 − Margin). Memorize the second one — it is the formula profitable contractors price with.
Frequently asked questions
Is 30% markup the same as 30% profit?
No. Profit as a share of the sell price is margin. A 30% markup gives a 23.08% margin, so on a $13,000 job you keep $3,000, not $3,900. To actually keep 30%, charge $14,286 on $10,000 of cost.
Which should I set first, markup or margin?
Set the margin you need to cover overhead and leave net profit, then let the calculator derive the markup. Margin is the number your financials are judged on.