Calculate your selling price based on job cost and desired profit margin. This calculator helps contractors understand the difference between markup and margin, and price jobs to achieve their profit goals.
Selling Price
$11,764.71
Profit
$1,764.71
Markup
17.6%
Many contractors confuse markup and margin. They are related but different:
To calculate selling price from cost and desired margin:
Selling Price = Job Cost / (1 - Margin Percentage)
For example, with $10,000 cost and 15% desired margin:
Selling Price = $10,000 / (1 - 0.15) = $10,000 / 0.85 = $11,764.71
This gives you exactly 15% margin ($1,764.71 / $11,764.71 = 15%).
Using the wrong formula costs contractors money. If you simply add 15% to your $10,000 cost, you get $11,500. But that only gives you 13% margin ($1,500 / $11,500 = 13%), not 15%.
The difference of 2% margin might seem small, but on $500,000 in annual revenue, it is $10,000 in lost profit.
Common questions about this calculation
Markup is the percentage added to your cost to determine the selling price. Margin is the percentage of the selling price that is profit. A 20% markup equals about 16.7% margin. A 20% margin requires about 25% markup. Many contractors confuse these, leading to underpriced bids.
Typical contractor markups range from 10% to 50%, depending on trade, market, and project type. This translates to margins of roughly 9% to 33%. Know your overhead costs and desired profit, then calculate the margin needed to cover both.
Yes, your job cost should include direct costs (materials, labor, subs) plus allocated overhead (insurance, vehicles, office, etc.). The markup/margin then represents pure profit. If overhead is not included in job cost, you need a higher margin to cover it.
Markup = Margin / (1 - Margin). For 20% margin: 0.20 / 0.80 = 0.25 or 25% markup. This formula ensures your selling price achieves the desired margin percentage.
If your calculated price is not competitive, look at reducing costs rather than margin. Can you improve labor productivity, find better material pricing, or reduce overhead? Cutting margin to win work often leads to financial problems.
Tectonic AI automatically extracts quantities from your construction plans. Get the numbers you need to estimate accurately in minutes, not hours.
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