Construction Markup Calculator

Markup vs. Margin: The Contractor's Most Expensive Confusion

Confusing markup and margin is one of the most common — and costly — mistakes contractors make when pricing jobs. A lot of contractors aim for "25% profit" but charge cost + 25%, which actually gives them a 20% margin. On a $50,000 job, that's a $2,500 difference.

The Definitions

Markup is calculated on cost: if your cost is $10,000 and you add 33% markup, you charge $13,300.

Margin is calculated on selling price: if you charge $13,300 and your cost is $10,000, your margin is $3,300 ÷ $13,300 = 24.8%.

So a 33% markup produces a ~25% margin. A 25% markup only produces a 20% margin. When you say you want to make 25% on a job, you need a 33% markup — not 25%.

What Markup Do Contractors Typically Use?

It varies by trade and region, but common ranges are:

• General contractors on subcontracted work: 10-20% markup
• Materials markup: 15-30%
• Total job markup over all costs: 25-50% (targeting 20-33% margin)

The right markup for you depends on your overhead costs, market, and desired profit. Higher overhead (more employees, vehicles, equipment) requires higher markup to achieve the same net profit.

The Danger of Underpricing

Underpricing isn't just a margin problem — it's a cash flow problem. When margins are thin, one bad job or unexpected cost can put you in the red for the month. Pricing with appropriate markup creates a buffer that absorbs surprises without sinking the business.