Contractor Markup Calculator: Selling Price From Cost and Markup
Markup is the percentage you add to a job's cost: selling price = (labor + materials) × (1 + markup). The catch is that markup is not margin. A 20% markup on $8,000 of cost gives a $9,600 price and a 16.7% margin, because margin is measured against the price, not the cost. The calculator shows both numbers on your own costs; the conversion table and a method for choosing a markup from your overhead are below.
To start from the margin you want instead of a markup, use the markup vs margin calculator or price the whole job after overhead and a risk reserve on the contractor profit calculator.
Project Costs
Total labor costs including wages and benefits
All materials, supplies, and equipment rental
Use a percentage based on your own costs, overhead, risk, and target
Pricing Results
How the calculator gets the price
Four lines of arithmetic and the two conversions that stop markup and margin from getting confused.
- 1.
Total cost
labor + materials
- 2.
Markup amount
total cost × markup %
- 3.
Selling price (the headline number)
total cost + markup amount
- 4.
Profit margin
markup amount ÷ selling price
- 5.
The two conversions
margin = markup ÷ (1 + markup); markup = margin ÷ (1 − margin)
The margin label in the results (Low, Fair, Good, Excellent) is a fixed cut at 10%, 20% and 30% margin. It is not a benchmark for your trade; the only external figure on this page is the NAHB remodeler data in the choosing-a-markup section, and it is labeled for what it is.
Worked example: the $400 that goes missing
Illustrative inputs, the same as the calculator's prefilled values: $5,000 of labor, $3,000 of materials, and a contractor who wants to make 20% on the job.
- Total cost
- $5,000 labor + $3,000 materials = $8,000
- Markup amount at 20%
- $8,000 × 0.20 = $1,600
- Selling price
- $9,600
- Margin that leaves
- $1,600 ÷ $9,600 = 16.7%
- Markup needed for a 20% margin
- 0.20 ÷ 0.80 = 25%
- Selling price at 25% markup
- $10,000
Entering 20 as the markup because 20% is the margin you want leaves $400 on the table on this one job, and 3.3 points of margin on every job priced the same way. The fix is one conversion: divide the margin you want by one minus that margin before you type it in.
Markup to margin, on $8,000 of cost
Read down the markup column to the margin it actually leaves. The price column uses the example's $8,000 total cost.
| Markup on cost | Margin on price | Price on $8,000 |
|---|---|---|
| 10% | 9.1% | $8,800 |
| 15% | 13.0% | $9,200 |
| 20% | 16.7% | $9,600 |
| 25% | 20.0% | $10,000 |
| 30% | 23.1% | $10,400 |
| 35% | 25.9% | $10,800 |
| 40% | 28.6% | $11,200 |
| 50% | 33.3% | $12,000 |
| 66.7% | 40.0% | $13,336 |
| 100% | 50.0% | $16,000 |
How to choose a markup from your overhead
A markup is not a feeling. If you know what overhead is as a share of your revenue (last twelve months of indirect costs divided by last twelve months of sales) and what share of revenue you want as profit, the markup falls out of one formula: markup = 1 ÷ (1 − overhead share − profit share) − 1.
- Overhead as a share of revenue (illustrative)
- 25%
- Profit you want as a share of revenue (illustrative)
- 10%
- Markup = 1 ÷ (1 − 0.25 − 0.10) − 1
- 53.8%
- Price on $8,000 of direct cost
- $8,000 × 1.538 = $12,308
- Of which overhead (25% of price)
- $3,077
- Of which profit (10% of price)
- $1,231
The 25% and 10% are illustrative inputs, not recommendations. Notice that adding them and entering 35% as the markup would give $10,800, where overhead at 25% of price is $2,700 and the $100 left is a 0.9% profit, not 10%.
For one reference point from a real group: NAHB reports that residential remodelers averaged a 29.9% gross margin and a 6.3% net margin in 2024 (NAHB, Home Remodeling Profit Margins, posted April 10, 2026; checked October 7, 2026). Derived from those two figures, not reported by NAHB: a 29.9% gross margin is a 42.7% markup on cost of sales (0.299 ÷ 0.701), and the gap between gross and net implies operating expenses of about 23.6% of revenue for that group. Those describe remodeling firms in that survey; they are a sanity check for the formula, not a target for your business.
Which costs the markup has to carry
The calculator applies one markup to the total. If you split it by cost type, this is what each line is paying for. Practices, not benchmarks; no percentages are implied.
| Cost line | What its markup pays for | Note |
|---|---|---|
| Your own and your crew's labor | Most of the overhead (insurance, truck, tools follow the hours) plus profit | The line that takes the full markup. |
| Materials you buy | Pickup time, handling, returns, warranty on the part, your money tied up until the invoice is paid | Some contractors use a lower markup here; some use the same one. Either way it is not zero. |
| Subcontractors | Coordination, scheduling, your warranty on their work | Markup for the responsibility you take, not just a pass-through. |
| Permits, dump fees, pass-through costs | Little beyond the time to arrange them | At cost or with a small handling amount; say which on the estimate. |
Whatever markup you land on, check it against the floor first: the break-even calculator shows the price at which the job covers its costs and nothing else, and the job cost calculator builds the labor line from hours and a rate before the markup goes on.
Questions about contractor markup
What is a good markup percentage for contractors?
The one that covers your overhead and the profit you want when both are measured against the price. The method on this page: markup = 1 ÷ (1 − overhead share − profit share) − 1, so a business with overhead at 25% of revenue that wants 10% profit needs a 53.8% markup on direct costs, not 35%. As a reference for one group, NAHB reports residential remodelers averaged a 29.9% gross margin in 2024, which works out to a 42.7% markup on their cost of sales; that describes those firms, not a target for yours.
How is markup different from profit margin?
Markup is measured against cost; margin is measured against the selling price. A 25% markup on $100 of cost gives a $125 price, and the $25 is 20% of $125, so the margin is 20%. For the same dollars of profit, the markup percentage is always the larger number. Convert with margin = markup ÷ (1 + markup) and markup = margin ÷ (1 − margin).
What markup do I need for a 30% margin?
42.9%: 0.30 ÷ (1 − 0.30). On $8,000 of cost that is a $11,429 price, of which $3,429 is 30%. Entering 30 as the markup instead would give $10,400 and a 23.1% margin, which is the usual way a 30% target quietly becomes 23%.
Should I use the same markup on labor and materials?
You can, and this calculator applies one markup to the combined total. Many contractors split it because labor carries most of the overhead while materials carry handling, returns and warranty. If you split, run the calculator once for each line and add the two selling prices; the table above describes what each cost type usually has to carry.
Is "overhead and profit" on an insurance estimate a markup?
Yes, two added percentages, and adding them does not produce a margin of their sum. The contractor profit calculator page explains the "10 and 10" arithmetic and the Xactimate setting that decides whether the second 10% compounds. Use this page for a markup you choose yourself, and that one for a margin-based price after overhead and a risk reserve.
Does the selling price include sales tax?
No. The calculator stops at price before tax. Whether and how sales tax applies to labor, materials or both varies by state and by the kind of work, so add it on the invoice according to your own state's rules rather than folding it into the markup.
Convert your margin target once, then use it on every estimate
Work out the markup your overhead and profit target need, write it down, and build the next estimate from priced lines instead of a round number. Estimates are on every Pocket Boss plan, from $19.99/month, with a 14-day trial.
Related: markup vs margin calculator, contractor profit calculator, contractor hourly rate calculator, all contractor calculators.