Markup and margin are not the same number
Enter your direct costs and the margin you want to keep. This shows the markup that actually produces it, the arithmetic behind it, and what the mix-up costs you on a single job.
What the mix-up costs on this one job
You want to keep 30.0%. Apply 30.0% as a markup instead and you quote $65,000 rather than $71,429, and you keep 23.1%.
$6,428.57 less gross profit
On this one job. Ten jobs a year at this size: $64,286.
The two definitions
- Markup
- Profit measured against cost.
markup % = (price − cost) ÷ cost × 100. A $50,000 job priced at $65,000 carries a 30% markup. - Gross margin
- Profit measured against price.
margin % = (price − cost) ÷ price × 100. That same $65,000 job carries a 23.1% margin. - Converting between them
markup = margin ÷ (1 − margin)andmargin = markup ÷ (1 + markup). Markup is always the larger number, and the gap widens fast as the target climbs.
The mistake is not arithmetic ignorance. It is that both numbers are quoted as a percentage, both are called “profit” in conversation, and the smaller one sounds like the safer one. An owner who wants to keep 30% and applies 30% keeps 23.1%, every job, for years.
Margin to markup, at a glance
| Margin you keep | Markup required | Price on $10,000 of cost | Gross profit |
|---|---|---|---|
| 5% | 5.3% | $10,526 | $526 |
| 10% | 11.1% | $11,111 | $1,111 |
| 15% | 17.6% | $11,765 | $1,765 |
| 20% | 25.0% | $12,500 | $2,500 |
| 25% | 33.3% | $13,333 | $3,333 |
| 30% | 42.9% | $14,286 | $4,286 |
| 35% | 53.8% | $15,385 | $5,385 |
| 40% | 66.7% | $16,667 | $6,667 |
| 45% | 81.8% | $18,182 | $8,182 |
| 50% | 100.0% | $20,000 | $10,000 |
| 55% | 122.2% | $22,222 | $12,222 |
| 60% | 150.0% | $25,000 | $15,000 |
The number is downstream of something else
A calculator settles the arithmetic. It does not tell you what you can charge. That is set by position, by what the market believes about you, and by whether the work is legible enough to be compared on anything other than price. Two contractors with identical costs in the same city carry different markups, and the difference is rarely on the spreadsheet.
So use this to stop losing margin to a definition. Then go work on the part that decides how large the number can be. Pricing sits inside positioning, which is the first of the Four Frameworks, and it is the piece most of our work starts with.
See how pricing sits inside the Four Frameworks →
Gross margin only. This treats every dollar entered as a direct cost of the job and ignores overhead, taxes and financing, so the profit shown is gross profit, not what lands in your account. Method: price = cost ÷ (1 − margin). Last updated 13 August 2026.