Markup Calculator
Calculate the correct markup percentage to apply to your job costs to achieve your desired profit margin.
Formula
Markup Percentage = (Desired Profit / Total Cost) × 100. Alternatively: Selling Price = Total Cost × (1 + Markup Percentage / 100)
How to Use
- 1Add up all job costs including materials, labor, subcontractors, and job-specific overhead.
- 2Determine your desired profit amount or percentage for the project.
- 3Divide the desired profit by the total cost to get the markup percentage.
- 4Apply the markup percentage to your total cost to calculate the selling price.
- 5Verify the result by subtracting total cost from selling price to confirm your profit.
Example
Scenario
A bathroom remodel has total costs of $8,000 (materials $3,000, labor $4,000, permits $500, dumpster $500). You want to earn a 20% profit margin on the selling price.
Calculation
To achieve a 20% profit margin, you need a 25% markup. Selling Price = $8,000 × 1.25 = $10,000. Profit = $10,000 - $8,000 = $2,000. Profit Margin = $2,000 / $10,000 = 20%.
Result
Apply a 25% markup to your $8,000 in costs for a selling price of $10,000 and a profit of $2,000 (20% profit margin).
Tips
- ★Markup and margin are not the same — a 25% markup yields a 20% margin. Use the formula: Markup = Margin / (1 - Margin).
- ★Apply markup to all costs including materials, labor, subs, and job overhead — not just materials.
- ★Review and adjust your markup annually based on actual job profitability data.
- ★Consider using tiered markups: higher on materials you handle and lower on subcontractor costs.
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Common questions about the markup calculator
Markup is calculated as a percentage of your cost, while profit margin is calculated as a percentage of the selling price. A 50% markup results in a 33% profit margin. For example, if a job costs $10,000 and you mark it up 50%, the selling price is $15,000. Your $5,000 profit is 50% of cost (markup) but only 33% of the $15,000 selling price (margin).
Most successful contractors use a markup of 35-50% on remodeling work and 15-25% on new construction. The right markup depends on your overhead costs, desired profit, market conditions, and project type. Calculate your required markup based on your actual overhead rate and target profit rather than using industry averages.
Yes, you should mark up subcontractor costs to cover your overhead for managing, coordinating, and being responsible for their work. A typical markup on subcontractor costs is 10-20%. You are providing project management, warranty backing, and taking on liability, which justifies the markup.