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Markup vs Margin Calculator

Convert between markup and margin, and price from cost using the formula you actually intended.

Markup and margin are not interchangeable. Markup measures profit relative to cost. Margin measures profit relative to the selling price. The same percentage applied against two different bases produces two different prices.

A contractor who applies a target margin as if it were a markup prices below the profit target on every job it touches. This calculator shows the math in both directions so the number you use is the number you meant. Learn the difference between markup and margin.

Run the numbers

Cost + Markup → Selling Price & Margin

Enter a cost and the markup percentage you plan to add. The calculator returns the selling price, the profit and the margin that markup actually produces.

  • Selling Price = Cost × (1 + Markup)
  • Profit = Selling Price − Cost
  • Margin = Profit ÷ Selling Price

The total cost of the item, material package or job you are pricing.

Enter the percentage as a whole number. 25 means 25%.

Markup vs Margin: The Difference

Markup is profit divided by cost. Margin is profit divided by the selling price. Both describe the same dollars of profit — they simply measure those dollars against a different number, and the selling price is always the larger of the two.

That is why an equivalent margin always looks smaller than the markup that produced it, and why converting between them matters before a percentage reaches an estimate. For the full walkthrough, read markup vs margin for electrical contractors.

Why a 20% Markup Is Not a 20% Margin

Take a $1,000 cost and add a 20% markup. The job sells for $1,200 and produces $200 of profit. That $200 is 20% of the cost, but it is only 16.67% of the $1,200 selling price.

The percentage did not change. The base did. A contractor aiming for a 20% margin who applies a 20% markup falls short on every job, and the shortfall compounds across a year of work.

How to Price for a Target Margin

Selling Price = Cost ÷ (1 − Margin)

Using the same $1,000 cost with a 20% target margin: $1,000 ÷ 0.80 = $1,250. The job produces $250 of profit, which is exactly 20% of the $1,250 selling price — and the equivalent markup is 25%.

Dividing by one minus the margin is the only way to hit a margin target from a known cost. Multiplying cost by one plus the margin produces a different, lower price.

Where Electrical Contractors Use Markup

Markup shows up wherever a cost is already known and a percentage is applied on top of it: materials pulled for a job, subcontractor invoices, rented or purchased equipment, and other direct job costs such as permits, disposal or specialty testing.

The right percentage depends on your company's cost structure and the way it recovers overhead — this calculator converts whatever figures you enter and does not recommend a number. Explore the pricing and profitability hub or browse the full set of contractor tools.

How Margin Connects to Your Labor Rate

The Labor Rate Calculator uses the same margin mathematics. It divides the break-even hourly cost by one minus the target margin, exactly as this calculator divides cost by one minus the margin, so the profit target is a share of the rate you bill rather than an add-on to your cost.

For the step-by-step version of that calculation, read how to calculate an electrical labor rate, then compare your figure against what an electrical contractor should charge per hour. Because break-even depends on the company costs behind it, it is also worth reviewing how to calculate electrical business overhead and running the overhead calculator.

Frequently Asked Questions

Markup measures profit against cost: Profit ÷ Cost. Margin measures profit against the selling price: Profit ÷ Selling Price. Both describe the same dollars of profit, but the base is different, so the same percentage means two different prices.

A 25% markup. Using Markup = Margin ÷ (1 − Margin), 0.20 ÷ 0.80 = 0.25. A $1,000 cost marked up 25% sells for $1,250, and $250 of profit on a $1,250 price is a 20% margin.

A 20% margin. Using Margin = Markup ÷ (1 + Markup), 0.25 ÷ 1.25 = 0.20.

Divide the cost by one minus the margin: Selling Price = Cost ÷ (1 − Margin). A $1,000 cost at a 20% target margin is $1,000 ÷ 0.80 = $1,250. Multiplying cost by 1 + margin is the most common version of this mistake and produces a lower price than intended.

A $1,000 cost with a 20% markup sells for $1,200 and produces $200 of profit. That $200 is 20% of the $1,000 cost but only 16.67% of the $1,200 selling price. Margin always looks smaller than the equivalent markup because the selling price is the larger number.

Both are used, for different jobs. Markup is a practical way to apply a percentage to a known cost while building an estimate. Margin is how the result is measured on the income statement. The important part is knowing which one a percentage refers to before it is applied to a price.

Yes, and that combination is common. Materials and subcontractors are frequently priced by applying a markup to cost, while the completed job or the company as a whole is reviewed in margin terms. Converting between the two — which is what this calculator does — keeps the two views consistent.

No. Gross margin is revenue minus direct job costs such as field labor, burden, materials and subcontractors, expressed as a percentage of revenue. Net profit margin subtracts overhead and other operating expenses as well. A job can carry a healthy gross margin and still leave nothing behind once overhead is covered.

Pricing Math Is Only Part of Profitability

Markup and margin do not operate on their own. They sit on top of labor cost, overhead recovery, utilization and job costing, and they only hold up when pricing is applied with discipline across every estimate rather than case by case.

Contractor Core walks through those pieces together so the percentage on the estimate reflects how the business actually operates.

Explore Contractor Core