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Margin vs markup calculator
Margin is profit divided by the selling price; markup is profit divided by cost. A job costing $700 needs a $1,000 price for a 30% margin. Adding a 30% markup instead gives $910. Use the basis you mean, include the complete job cost and compare the profit each price leaves.
Compare the two
Example numbers
- Cost
- $700.00
- Profit
- $300.00
- Margin on selling price
- 30%
- Markup on cost
- 42.86%
Price = cost ÷ (1 − 30% margin)
How do you calculate a price from a margin?
Divide the cost by one minus the target margin as a decimal. The formula is selling price = cost ÷ (1 − margin). Profit is the selling price minus cost. A 30% margin leaves 30 cents of each sales dollar after the costs you included.
For a service job, the cost can include paid labor, your own working time, materials, travel and an allowance for overhead. A margin based only on materials will not tell you what is left after completing the job. Keep sales tax you collect for the tax authority outside the before-tax comparison.
How do you calculate a price from a markup?
Multiply the cost by one plus the markup as a decimal. The formula is selling price = cost × (1 + markup). Markup and margin use different denominators, so entering the same percentage gives different prices.
Use the margin option when you want a target share of the selling price left after costs. Use markup when you have agreed to add a percentage of the cost. The result shows both measures so you can compare them without switching terminology halfway through a quote.
Should a contractor price with margin or markup?
Set your prices from margin. Margin tells you what share of every dollar you keep, which is how you compare jobs, set targets and read your books. Markup works as a shortcut on materials, as long as you know a 30% markup is only a 23% margin. Confusing the two is how owners think they make 30% and actually make 23%.
Example: your numbers in the calculation
If the job costs you $700 and you want a 30% margin, $700 ÷ 0.70 = $1,000. The $300 profit is 30% of the selling price.
A 30% markup gives $700 × 1.30 = $910. Its $210 profit is about 23.08% of the selling price. To keep the same margin when your costs change, recalculate from the full new cost.
Frequently asked questions
Is 30% margin the same as 30% markup?
No. On a $700 cost, 30% margin produces $1,000, while 30% markup produces $910. Margin divides profit by price; markup divides profit by cost.
Why can’t a margin be 100%?
Because margin is a share of the price, and a job with any cost can never be all profit. Price = cost ÷ (1 − margin), so at 100% you would divide by zero. Markup has no ceiling: a 100% markup just doubles the cost.
Does this calculate gross or net profit?
It calculates profit after the costs you enter. Include only direct job costs to see the amount before overhead, or include overhead too to see what remains after that allocation.
How do you convert markup to margin?
Margin = markup ÷ (1 + markup), and markup = margin ÷ (1 − margin). A 30% markup is 0.30 ÷ 1.30 = 23.1% margin; a 30% margin needs a 0.30 ÷ 0.70 = 42.9% markup.