Free reference · printable
Markup to margin chart for contractors
Markup is profit as a share of your cost. Margin is profit as a share of the price the customer pays. Adding 20% to your cost does not give you a 20% margin, and that gap is where a lot of bids lose money. Use the chart to find the markup that hits the margin you want.
Margin you want → markup to add to cost
Formula: markup = margin ÷ (1 − margin). The last column is the bid on a $10,000 direct cost.
| Target margin | Markup on cost | Bid on $10,000 cost |
| 5% | 5.3% | $10,526 |
| 8% | 8.7% | $10,870 |
| 10% | 11.1% | $11,111 |
| 12% | 13.6% | $11,364 |
| 15% | 17.6% | $11,765 |
| 18% | 22.0% | $12,195 |
| 20% | 25.0% | $12,500 |
| 22% | 28.2% | $12,821 |
| 25% | 33.3% | $13,333 |
| 28% | 38.9% | $13,889 |
| 30% | 42.9% | $14,286 |
| 33% | 49.3% | $14,925 |
| 35% | 53.8% | $15,385 |
| 40% | 66.7% | $16,667 |
| 45% | 81.8% | $18,182 |
| 50% | 100.0% | $20,000 |
Markup you already use → margin you actually get
Formula: margin = markup ÷ (1 + markup).
| Markup on cost | Real margin |
| 10% | 9.1% |
| 15% | 13.0% |
| 20% | 16.7% |
| 25% | 20.0% |
| 30% | 23.1% |
| 40% | 28.6% |
| 50% | 33.3% |
| 100% | 50.0% |
The quick way to price for a margin
Divide your cost by (1 − target margin). For a 25% margin on $10,000: $10,000 ÷ 0.75 = $13,333. Multiplying by 1.25 instead gives $12,500, a 20% margin, which is $833 less than you planned on that one job.
Where overhead fits
If your “cost” is only labor, materials and subs, the margin in this chart has to cover overhead (office, trucks, insurance, your unbilled time) and profit. Many contractors add overhead to the direct cost first, then price for a profit margin on top. The free bid markup calculator does it that way: direct cost, overhead, contingency and target margin in, bid price out.
The chart is arithmetic, not a recommended markup or an industry benchmark. Use the numbers from your own books. Not accounting or tax advice; check how sales tax applies to materials and labor in your state.
Want the whole bid on paper?
The Contractor Bid Kit puts this math in a fillable estimate and takeoff worksheet and an Excel calculator, with a proposal template, scope and exclusions checklist, change order, progress payment schedule and bid follow-up scripts. $49 one-time. The chart and calculator stay free either way.
Get the Contractor Bid Kit — $49 Use the free calculatorTemplates and worksheets, not legal, tax or accounting advice. Contract, licensing, deposit, retainage, lien and notice rules vary by state: check your state licensing board and local lien rules, and have an attorney in your state review your contracts before you use them. No guaranteed results.