Nocap Technologies
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Markup vs margin calculator for contractors
Cost plus 35 percent is a 26 percent margin, not 35. Here is the real number.
Defaults show a $10,000 job at 35% markup, with a 35% margin target.
The two formulas
margin = (price - cost) / price markup = margin / (1 - margin)
Markup is measured against your cost. Margin is measured against the price. The price is the bigger number, so the margin is always the smaller percentage. That gap is where a season of profit quietly disappears.
Markup to margin conversion table
| Markup on cost | Margin on price | Price on a $10,000 job |
|---|---|---|
| 10% | 9.1% | $11,000 |
| 15% | 13% | $11,500 |
| 20% | 16.7% | $12,000 |
| 25% | 20% | $12,500 |
| 30% | 23.1% | $13,000 |
| 35% | 25.9% | $13,500 |
| 40% | 28.6% | $14,000 |
| 50% | 33.3% | $15,000 |
| 60% | 37.5% | $16,000 |
| 75% | 42.9% | $17,500 |
| 100% | 50% | $20,000 |
| Target margin | Markup needed |
|---|---|
| 10% | 11.1% |
| 15% | 17.6% |
| 20% | 25% |
| 25% | 33.3% |
| 30% | 42.9% |
| 35% | 53.8% |
| 40% | 66.7% |
| 45% | 81.8% |
| 50% | 100% |
What that looks like on real jobs
Add 20 percent markup and you keep a 17 percent margin. Add 35 and you keep 26. Add 50 and you keep 33. If you want to keep 40 percent of the price, you need to add 67 percent to your cost.
Your cost is bigger than you think
Before the markup argument matters at all, the cost has to be right. A worker you pay $22 an hour costs you closer to $28 to $32 once payroll taxes, workers compensation and liability insurance are in. Use the loaded number, not the wage.
Then the line items crews leave off the bid: mobilization and drive time, layout and staking, permits and the trips to pull them, traffic control, erosion control, short load fees, curing compound and sealer, saw blades, dump fees, sod repair where the machine tore up the yard, return trips for punch list work, small tools and consumables, insurance certificates, and your own office time. Any three of those, missed, is the profit on the job.
Know your floor before you negotiate
The floor is direct cost plus a thin margin, usually about 10 percent. It is the price where you stop being a business and start buying yourself a job. Customers will ask you to come down. The ones who win that conversation are the ones who already know exactly where the wall is.
Want this built into your bids instead of a web page?
The Concrete and Hardscape Estimating Kit is a spreadsheet that does this for every line of a job: your rates, your markup, unit prices, margin, floor price and the cash you need up front. Plus a Word quote template and a ten section pricing guide. Works in Excel, Numbers and Google Sheets. One payment, no subscription.
Questions people ask
What is the difference between markup and margin?
Markup is the percentage you add to your cost. Margin is the percentage of the final price that is profit. Cost plus 35 percent markup produces a 26 percent margin, because the profit is measured against the larger price, not against the cost.
What markup do I need for a 35 percent margin?
About 54 percent. The formula is markup = margin / (1 - margin), so 0.35 / 0.65 = 0.538.
What should a concrete contractor charge for markup?
Small residential concrete and hardscape crews commonly work between 25 and 50 percent markup on direct cost, which is a 20 to 33 percent margin. The right number depends on your overhead, your risk on the job and how busy you are, so calculate it rather than copying a number.
What is a floor price?
The lowest price where the job still covers direct cost plus a thin margin, usually cost plus about 10 percent. Below the floor you are working for wages, so knowing it before you negotiate tells you exactly where to stop.
Does the markup go on materials too?
Yes. Materials carry handling, waste, delivery coordination and the risk of a price change between bid and pour. Marking up labor only is one of the most common ways small crews end a profitable-looking year with nothing in the bank.
Is a deposit the same as profit?
No. A deposit is the customer funding the start of the work. The floor price tells you whether the job makes money; your cash position tells you whether you can survive doing it.
About this calculator
Built by Nocap Technologies, an AI consulting and automation firm in Alpharetta, GA, out of the estimating work we do for contractors. If your quotes still take an evening each, see AI automation for small businesses.