Contractors & trades
Contractor markup vs. margin and bid price calculator
Start with job costs, choose a target markup or a target margin, and get a bid price that actually contains the profit you meant to include. The two methods are not interchangeable.
How to use this calculator
- Enter materials, labor, subs, and any other costs that belong to the job. Add allocated overhead if you want it in the cost before profit.
- Choose whether you think in margin or in markup. Margin is profit ÷ bid price. Markup is profit ÷ cost.
- Enter the percentage you want. The bid is cost ÷ (1 − margin) if you chose margin, or cost × (1 + markup) if you chose markup.
- Read both percentages in the results. If you asked for a margin, the note also shows what would happen if that same percentage were applied as a markup by mistake.
The formulas
- Markup = (bid − cost) ÷ cost
- Margin = (bid − cost) ÷ bid
- Markup = margin ÷ (1 − margin); margin = markup ÷ (1 + markup)
Example: a $10,000 job with a 30% margin requires a $14,285.71 bid (42.86% markup). A 30% markup on the same job is only a $13,000 bid and a 23.08% margin.
Price the job, then track what it actually costs
The Contractor Job Costing Tracker ($14) is a spreadsheet for estimates, actual costs, and job profit as the work proceeds. This calculator only turns a cost total into a bid.
Frequently asked questions
What is the difference between markup and margin?
Markup is profit divided by cost. Margin is profit divided by the bid (selling) price. They are related but not equal. Margin = markup ÷ (1 + markup). Markup = margin ÷ (1 − margin). If your job costs $10,000 and you want a 30% margin, you must bid $14,285.71, which is a 42.86% markup—not a 30% markup.
What happens if I add 30% markup when I meant 30% margin?
On a $10,000 job, a 30% markup produces a $13,000 bid and only a 23.08% margin. You would have underbid by $1,285.71 relative to a true 30% margin. This calculator shows that gap so you can see it before you send the quote.
Should I put overhead in the cost or in the margin?
Pick one method and be consistent. Many contractors put identifiable job overhead (permits, equipment rental, supervision allocated to the job) in the cost, then apply a margin that covers remaining company overhead plus profit. If you leave overhead out of the cost and also use a thin margin, the job can look profitable on paper and still lose money.
Does this include tax, change orders, or retainage?
No. It prices a bid from the costs you enter. Add sales tax only if you must collect it in your jurisdiction and it is not already in the cost. Change orders and retainage belong in your job-costing records as the work proceeds.
Is a higher margin always the right bid?
No. The right bid also has to be one a customer will accept and that you can deliver. This tool only does the arithmetic so the margin you intended is the margin that is actually in the number you quote.