RHACOVA

Free contractor tool

Markup vs Margin Calculator

Enter your job cost and work from markup, a target margin or a price you already quoted. You get the selling price, the profit and both percentages — clearly separated, because markup and margin are not the same number.

Your numbers

Work from

Markup is profit measured against your cost.

Enter the job cost as a dollar amount, for example 8000 or 8,000.00.

What if you discount?

Optional. See what a customer discount does to profit and margin.

Your result

Enter a job cost to see your selling price, profit, margin and markup.

Markup and margin are not the same

Markup measures profit against what the job costs you. Margin measures the same profit against what the customer pays. Because the two use different denominators, the same job always shows a higher markup than margin — and quoting one while thinking of the other is how contractors quietly lose money.

Example: a job costs $8,000. Add a 25% markup and you charge $10,000. The $2,000 profit is 25% of your cost, but only 20% of the price. So a 25% markup is a 20% margin — the same job, two different numbers.

The formulas this calculator uses

  • Selling price from markup: price = cost × (1 + markup)
  • Selling price from a target margin: price = cost ÷ (1 − target margin)
  • Profit = price − cost
  • Margin = profit ÷ price · Markup = profit ÷ cost
  • Markup from margin: markup = margin ÷ (1 − margin)
  • Margin from markup: margin = markup ÷ (1 + markup)
  • Discounted price = price × (1 − discount)
  • Price needed to keep a target margin after a discount: cost ÷ ((1 − target margin) × (1 − discount))

Every result on this page is produced by the same calculation engine RHACOVA uses internally, with exact decimal arithmetic and cent-level rounding — never floating-point approximations. Open “Why this number?” on any result to see the exact formula, inputs and engine version behind it.

What a discount really costs

A discount comes straight out of profit, not out of cost. On the $10,000 job above, a 10% discount drops the price to $9,000 — but profit falls from $2,000 to $1,000. That is half the profit for a tenth off the price. To keep a 20% margin after a 10% discount, the job has to be listed at $11,111.11.

Worked example

A job that costs $8000 with a 25% markup, then a 10% customer discount:

  • Selling price: $10,000.00
  • Profit: $2,000.00
  • Markup: 25.00%
  • Margin: 20.00% — the same job, a lower number than the markup
  • Price after the discount: $9,000.00
  • Price needed to hold the original margin after that discount: —

These figures are produced by the same engine as the calculator above, so the example cannot drift away from the tool.

Common mistakes

  • Adding your target margin as a markup. A 20% margin needs a 25% markup, not 20%.
  • Assuming a 10% discount costs 10% of profit. It comes out of profit alone, so it usually costs far more.
  • Marking up an incomplete cost. If labor is entered at the raw wage, every percentage on top of it is built on a number that is too low.
  • Using one markup for every job. Cost mix, risk and duration differ; the percentage that works on a small job may not cover a long one.
  • Forgetting overhead. Job cost is not company cost — overhead has to be recovered too.

Related decisions

Learn the method