Markup vs margin calculator
Enter your cost and the markup you apply. See the price to bid and your real gross margin. They are not the same number, and the difference is profit you may be giving away.
A 20.0% markup is only a 16.7% margin. The two are not the same, and the gap is where contractors lose money.
Why markup is not margin
Markup is profit measured against your cost. Margin is profit measured against your price. Because the price is larger than the cost, the margin is always a smaller percentage than the markup. A contractor who bids a 20 percent markup believing it is a 20 percent margin is actually keeping closer to 16.7 percent, and that gap repeats on every job.
FAQ
- What is the difference between markup and margin?
- Markup is profit as a percentage of cost. Margin is profit as a percentage of price. A 20 percent markup is only about a 16.7 percent margin, which is why the two are easy to confuse and costly to get wrong.
- How do I convert markup to margin?
- Margin equals markup divided by (1 plus markup). For example, a 25 percent markup is a 20 percent margin.
- Why does this matter for contractors?
- Bidding with a markup while thinking it is your margin quietly erodes profit on every job. The gap compounds across a year of work.
Related: What is job costing in construction.
Know your real margin on every job.
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