Short answer
Markup is profit as a percentage of cost; margin is profit as a percentage of price. Price from a margin with cost / (1 - margin); price from a markup with cost x (1 + markup). On a $100 cost, a 30% margin is $142.86 while a 30% markup is $130.00, which keeps only 23.08%.
- Margin = (price - cost) / price. Markup = (price - cost) / cost.
- Margin to markup: markup = margin / (1 - margin). 20% margin = 25% markup.
- Markup to margin: margin = markup / (1 + markup). 50% markup = 33.33% margin.
- The same % as markup always bills less than as margin: $95.36 less on a $506.00 job at 35%.
- At three such jobs a week that gap is $14,876.40 a year.
On this page
- What is the difference between markup and margin?
- Markup vs margin calculator
- Markup to margin conversion chart (10% to 60%)
- Is 20% margin the same as 25% markup?
- What confusing markup and margin costs per job and per year
- How to calculate markup and margin in Excel
- Should a contractor set prices by markup or by margin?
- How to calculate margin vs markup step by step
- Markup vs margin in your pricing sheet: calculator, template or custom
- Step-by-step
- FAQ
What is the difference between markup and margin?
Markup is measured against cost; margin is measured against the selling price. The profit in dollars is the same, but the percentage is different because it is divided by a different number.
A $100 cost sold for $142.86 makes $42.86 of profit. As a share of cost that is a 42.86% markup. As a share of price it is a 30% margin. Both describe one sale.
| Measure | Formula | Based on | Price from it |
|---|---|---|---|
| Markup | (price - cost) / cost | Cost | cost x (1 + markup) |
| Margin | (price - cost) / price | Price | cost / (1 - margin) |
I'm not a contractor or a retailer; I build pricing math, and every figure here shows its working so you can check it.
Markup vs margin calculator
Enter your costs and target margin below. The calculator returns the price on margin and, next to it, what the same percentage typed as a markup would bill and how much that costs you.
For a quick conversion without labour or overhead, set hours to 0 and put your whole cost in materials. That is exactly how this example was built:
Worked example: A $100 cost priced at 30% (materials only, no labour - example)
| Item | Value |
|---|---|
| Workers (input) | 1 |
| Hourly wage paid (input) | $0.00 |
| Labour burden % (input) | 0% |
| Materials (input) | $100.00 |
| Overhead for the year (input) | $0.00 |
| People in the field (input) | 1 |
| Billable days a year (input) | 220 |
| Target margin % (input) | 30% |
| Jobs a week (input) | 5 |
| Hours on the job (input) | 0 |
| Loaded labour rate (per hour) | $0.00 |
| Crew-hours | 0 |
| Labour cost | $0.00 |
| Overhead per sellable hour | $0.00 |
| Overhead share | $0.00 |
| Break-even cost | $100.00 |
| Price to quote | $142.86 |
| Profit on the job | $42.86 |
| Price if you MARK UP instead | $130.00 |
| Margin you actually keep with markup | 23.08% |
| Lost per job by marking up | $12.86 |
| Lost per year by marking up | $3,342.86 |
Computed with the same formulas as the free calculators on this site. Change any input in the calculator above to see your own numbers.
The same calculator is also at the free markup vs margin calculator page, no signup.
Markup to margin conversion chart (10% to 60%)
To keep a given margin, the markup must be larger: markup = margin / (1 - margin). The chart gives both directions and the prices on a $100 cost.
| Margin you want | Markup needed | Price on $100 cost at that margin | Price if you add the same % as markup | Margin that markup really keeps |
|---|---|---|---|---|
| 10% | 11.11% | $111.11 | $110.00 | 9.09% |
| 15% | 17.65% | $117.65 | $115.00 | 13.04% |
| 20% | 25% | $125.00 | $120.00 | 16.67% |
| 25% | 33.33% | $133.33 | $125.00 | 20% |
| 30% | 42.86% | $142.86 | $130.00 | 23.08% |
| 33% | 49.25% | $149.25 | $133.00 | 24.81% |
| 35% | 53.85% | $153.85 | $135.00 | 25.93% |
| 40% | 66.67% | $166.67 | $140.00 | 28.57% |
| 45% | 81.82% | $181.82 | $145.00 | 31.03% |
| 50% | 100% | $200.00 | $150.00 | 33.33% |
| 60% | 150% | $250.00 | $160.00 | 37.5% |
Read a row: to keep 35% of the price you need a 53.85% markup, and $100 of cost becomes $153.85. Type 35% as a markup and you bill $135.00, keeping 25.93%. The gap widens as the percentage rises: at 50%, margin pricing doubles the cost while markup pricing adds half.
Is 20% margin the same as 25% markup?
Yes. A 25% markup on cost produces a price that leaves 20% of that price as profit. The pairs in the chart are exact equivalents, and they are the only safe way to switch between the two.
Worked example: One-day job priced at a 20% margin (example assumptions)
| Item | Value |
|---|---|
| Workers (input) | 1 |
| Hourly wage paid (input) | $25.00 |
| Labour burden % (input) | 30% |
| Materials (input) | $180.00 |
| Overhead for the year (input) | $14,520.00 |
| People in the field (input) | 1 |
| Billable days a year (input) | 220 |
| Target margin % (input) | 20% |
| Jobs a week (input) | 3 |
| Hours on the job (input) | 8 |
| Loaded labour rate (per hour) | $32.50 |
| Crew-hours | 8 |
| Labour cost | $260.00 |
| Overhead per sellable hour | $8.25 |
| Overhead share | $66.00 |
| Break-even cost | $506.00 |
| Price to quote | $632.50 |
| Profit on the job | $126.50 |
| Price if you MARK UP instead | $607.20 |
| Margin you actually keep with markup | 16.67% |
| Lost per job by marking up | $25.30 |
| Lost per year by marking up | $3,946.80 |
Computed with the same formulas as the free calculators on this site. Change any input in the calculator above to see your own numbers.
Check it on this job: break-even is $506.00. At a 20% margin the price is $506.00 / 0.80 = $632.50. At a 25% markup it is $506.00 x 1.25 = $632.50. Same number. Type 20% as a markup instead and you bill $607.20, keeping 16.67%.
Other common conversions
- 30% markup vs 30% margin: 30% markup keeps 23.08%; a 30% margin needs a 42.86% markup.
- 10% markup vs 10% margin: 10% markup keeps 9.09%; a 10% margin needs 11.11%.
- 33% margin to markup: 0.33 / 0.67 = 49.25% markup.
- 20% markup to margin: 0.20 / 1.20 = 16.67% margin.
What confusing markup and margin costs per job and per year
Every time a margin target is applied as a markup, the quote comes in low by a fixed share of the price. On a real job with labour, materials and overhead, it adds up fast.
Worked example: The same job priced at a 35% margin (example assumptions)
| Item | Value |
|---|---|
| Workers (input) | 1 |
| Hourly wage paid (input) | $25.00 |
| Labour burden % (input) | 30% |
| Materials (input) | $180.00 |
| Overhead for the year (input) | $14,520.00 |
| People in the field (input) | 1 |
| Billable days a year (input) | 220 |
| Target margin % (input) | 35% |
| Jobs a week (input) | 3 |
| Hours on the job (input) | 8 |
| Loaded labour rate (per hour) | $32.50 |
| Crew-hours | 8 |
| Labour cost | $260.00 |
| Overhead per sellable hour | $8.25 |
| Overhead share | $66.00 |
| Break-even cost | $506.00 |
| Price to quote | $778.46 |
| Profit on the job | $272.46 |
| Price if you MARK UP instead | $683.10 |
| Margin you actually keep with markup | 25.93% |
| Lost per job by marking up | $95.36 |
| Lost per year by marking up | $14,876.40 |
Computed with the same formulas as the free calculators on this site. Change any input in the calculator above to see your own numbers.
Break-even is $506.00. The intended 35% margin price is $778.46. Adding 35% as a markup gives $683.10, which keeps 25.93%. That is $95.36 less on one job for the same work. At three jobs a week for 52 weeks it is $14,876.40 a year.
The error usually hides in one of two places: a spreadsheet formula written as =cost*(1+B8) where B8 was meant as a margin, or a habit of "adding 35%" that started as a margin target. If your break-even itself is off because the wage isn't loaded or overhead is missing, fix that first with how to price a contractor job and the overhead and profit calculator guide.
Try it with your numbers — free
The free calculator does this whole method in about a minute: loaded labour, overhead share, break-even and the price to quote at your margin. No signup, nothing to download, and your numbers stay in your browser.
Open the free calculator →Get the free spreadsheetWant it built around your own rates, services and branding? Done-for-you custom calculator ($497).
How to calculate markup and margin in Excel
Put cost in B1 and price in B2, or cost in B1 and a target percentage in B3, and use the formulas below. Format percentage cells as percentages so 30% is stored as 0.3.
Margin from cost and price
=(B2-B1)/B2B1 = cost, B2 = price. Format as a percentage.
Markup from cost and price
=(B2-B1)/B1B1 = cost, B2 = price.
Price from a target margin
=B1/(1-B3)B3 = target margin (e.g. 30%).
Margin to markup
=B3/(1-B3)B3 = margin. 20% returns 25%.
Markup to margin
=B4/(1+B4)B4 = markup. 50% returns 33.33%.
To build your own conversion chart, put 10% to 60% down column A and =A2/(1-A2) in B2 for the markup needed, then fill down. =A2/(1+A2) in C2 gives the margin a markup of A2 really keeps.
Should a contractor set prices by markup or by margin?
Set the target as a margin, because profit, overhead and payroll are all read as shares of revenue on a profit and loss statement. Markup is still useful as an entry method, as long as it is the converted figure from the chart.
Margin lines up with your books: if your P&L shows gross margin as a percentage of sales, a job priced at a 30% margin feeds straight into that number. A markup target doesn't; a 30% markup shows up as 23.08% on the same report, and the missing points are hard to trace back to the quotes.
Markup is handy on materials lines, where many suppliers and estimating tools expect a percentage on cost. That is fine if the figure you type is the converted markup (42.86% for a 30% margin), not the margin itself. Wherever you enter a percentage, label the cell "margin" or "markup" in words.
How to calculate margin vs markup step by step
Decide the margin you want to keep, convert it if your tools think in markup, and apply it to a break-even that already includes labour, materials and overhead.
- Find the full cost (break-even), not just materials.
- Choose a target margin, the share of the price you want to keep.
- Price = cost / (1 - margin).
- If a system only accepts markup, enter margin / (1 - margin).
- Check: (price - cost) / price should equal your target margin.
Markup vs margin in your pricing sheet: calculator, template or custom
A pricing sheet should store the target as a margin, show the price, and show the markup equivalent next to it, so nobody on the team applies the wrong one. A calculator is fine for checks; a spreadsheet keeps every job.
- Free calculator: one job, in the browser, with the markup gap shown in dollars.
- Free Job Pricing Starter: the same math in Excel or Google Sheets, priced on true margin with the markup equivalent beside it.
- Done-for-you custom build ($497): your own line items and rates, with total cost, price and profit in dollars and margin %.
For line-item estimates, the contractor estimate template guide lists the columns to include.
Step-by-step: Markup vs Margin Calculator, Conversion Chart and Excel Formulas
- Find the full cost. Add labour, materials and overhead share to get break-even. Margin and markup are only as good as the cost under them.
- Pick a target margin. Decide what share of the final price you want to keep as profit, such as 30%.
- Divide by one minus margin. Price = cost / (1 - margin). $100 at 30% margin is $142.86.
- Convert if you need a markup. Markup = margin / (1 - margin). A 30% margin needs a 42.86% markup.
- Check the result. Compute (price - cost) / price. It should equal your target margin exactly.
Run your own numbers — free
The free calculator does this whole method in about a minute: loaded labour, overhead share, break-even and the price to quote at your margin. No signup, nothing to download, and your numbers stay in your browser.
Open the free calculator →Get the free spreadsheetWant it built around your own rates, services and branding? Done-for-you custom calculator ($497).
Frequently asked questions
Is 20% margin the same as 25% markup?
Yes. A 25% markup on cost gives a price where profit is 20% of that price. On a $100 cost both produce $125: the $25 of profit is 25% of the cost and 20% of the price.
What is the difference between a 30% markup and a 30% margin?
A 30% markup adds 30% of cost, so $100 of cost sells for $130 and keeps 23.08% of the price. A 30% margin divides by 0.70, so $100 sells for $142.86 and keeps 30%. The margin price is $12.86 higher.
What is 30% margin on $100?
If $100 is your cost, the price at a 30% margin is $142.86, with $42.86 of profit. If $100 is the selling price, a 30% margin means $30 of profit and $70 of cost. Always check which of the two numbers the $100 refers to.
How do I convert markup to margin?
Divide the markup by one plus the markup: margin = markup / (1 + markup). A 25% markup is 0.25 / 1.25 = 20% margin; a 50% markup is 33.33%; a 100% markup is 50%. In Excel: =B4/(1+B4).
How do I convert 33% margin to markup?
Divide the margin by one minus the margin: 0.33 / 0.67 = 49.25% markup. A cost of $100 marked up 49.25% sells for $149.25, and profit is 33% of that price. In Excel: =B3/(1-B3).
How much margin is a 20% markup?
A 20% markup keeps 16.67% margin, because 0.20 / 1.20 = 0.1667. On a $100 cost the price is $120, and $20 of profit is 16.67% of $120. To keep a true 20% margin you need a 25% markup.
How do you calculate markup and margin in Excel?
With cost in B1 and price in B2, margin is =(B2-B1)/B2 and markup is =(B2-B1)/B1. To price from a target margin in B3 use =B1/(1-B3). Convert margin to markup with =B3/(1-B3) and markup to margin with =B4/(1+B4).
I'm not a contractor, landlord or accountant. I build the pricing maths, and every number on this page shows its working so you can check it instead of trusting it. Watch the breakdowns on YouTube →