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Markup vs margin calculator

Short answer: Margin is profit divided by price; markup is profit divided by cost. Convert with margin = markup ÷ (1 + markup) and markup = margin ÷ (1 − margin). A 25% markup is only a 20% margin, and a 30% margin needs a 42.9% markup. To hit a target margin, price = cost ÷ (1 − margin).

The formula

Markup = (price − cost) ÷ cost
Margin = (price − cost) ÷ price
Margin from markup = markup ÷ (1 + markup)
Markup from margin = margin ÷ (1 − margin)
Price from markup = cost × (1 + markup)
Price from margin = cost ÷ (1 − margin)

Worked example

Job cost $500:

• 25% markup: 500 × 1.25 = $625. Profit $125 ÷ $625 = a 20% margin
• 30% target margin: 500 ÷ 0.70 = $714.29. Profit $214.29 ÷ $500 = a 42.86% markup

Margin	Markup needed
10%	11.1%
20%	25%
30%	42.9%
40%	66.7%
50%	100%

FAQ

Why does the difference matter?

If you want a 30% margin but add a 30% markup, you only get a 23% margin. On $7,000 of cost that is $2,100 of profit instead of $3,000.

Which one should contractors use?

Set your target as a margin, because overhead and profit come out of the selling price. Then use the markup that delivers it.

Can margin be 100%?

No. Margin can only reach 100% if cost is zero. Markup has no upper limit.