Contractor Markup Calculator

Contractor markup calculator that turns a target profit margin into the markup you actually charge, prices the job, and shows what overhead eats out of it.

By CalcBuilt Editorial TeamUpdated September 9, 2026Formulas checked against manufacturer specs, see how we calculate.

Quick answer: To price a job, divide the job cost by 1 minus the target margin, never multiply by 1 plus it. A $14,000 job at a 30% target margin needs a 42.9% markup, a 1.43x multiplier, so quote $20,000. Adding 30% instead prices it at $18,200 and gives away $1,800.

Your measurements

Plan view from above: area is length times width.

Material cost for this job$What you pay the supplier, delivered, including waste and the return trip for the piece that came up short. Use your cost, not the retail price you show the customer.Labor cost for this job$Burdened cost, not the wage on the paycheck. Payroll taxes, workers compensation, benefits and unbillable hours typically push a wage to 1.5 to 2.2 times before overhead. The labor cost calculator works it out.Subcontractor cost for this job$What the trades invoice you. NAHB puts trade contractor costs at about 30 percent of a residential remodeler's revenue, so for many remodelers it is the largest line in cost of sales.Annual overhead$Everything that does not land on a job ticket: rent, trucks, insurance, phones, software, the bookkeeper, unbilled estimating time and your own wage. Leave your wage out and the net below is really your pay.Annual revenue$Total billed for the year, not profit. Use a realistic forecast rather than your best year; overhead recovery is a share of revenue, so an optimistic number under-recovers every job.Target gross margin%Margin, not markup. This is the share of the price left after job cost, before overhead. NAHB put remodelers at 29.9 percent and single-family builders at 20.7 percent.

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Markup to charge on cost42.9% markup, a 1.43x multiplierAll results

Results

Markup to charge on cost: 42.9% markup, a 1.43x multiplier; Quote $20,000 on $14,000 of job cost to land a 30% gross margin.
Price to quote: $20,000; $6,000 material plus $5,000 labor plus $3,000 subcontractors. Subs are 21% of job cost.
The markup as margin mistake: $18,200; Adding the 30% target as a markup is only a 23.1% margin. It quotes $1,800 low, and after overhead the net falls from $2,000 to $560.
Gross profit: $6,000; 30% of the $20,000 price. This pool pays overhead first, and only what is left is profit.
Overhead recovered: $4,000; $96,000 of annual overhead is 20% of $480,000 of annual revenue, charged against the $20,000 price.
Net profit on this job: $2,000, a 10% net margin; Gross profit after overhead. NAHB put the average residential remodeler at a 29.9% gross margin, 23.6% overhead and a 6.3% net margin for fiscal 2024.

Contractor Markup formula

Job cost = Material + Labor + Subcontractors
Price = Job cost / (1 - Target margin), never Job cost x (1 + Target margin)
Markup % = Target margin / (1 - Target margin), so a 30% margin needs 42.9% markup
Overhead recovery % = Annual overhead / Annual revenue
Net profit = Price x (Target margin - Overhead recovery %)

Worked example

A bathroom remodel with $4,200 of material, $7,800 of your own labor and $6,000 to a tile setter and an electrician. Job cost is $18,000 and the target is a 35 percent margin. Divide by 0.65 and the price is $27,692, a 53.8 percent markup or a 1.54 multiplier.

Gross profit is $9,692. Overhead is $150,000 a year on $600,000 of revenue, which is 25 percent, so this job carries $6,923 of it and nets $2,769. Now price the same job by adding 35 percent instead: $24,300, a 25.9 percent margin, $6,300 gross. Overhead still takes $6,075 of that, so the net drops from $2,769 to $225. The quote looked only 12 percent lower and the profit fell by 92 percent.

Quick reference

Markup to margin conversion, and what each one makes of a $14,000 job cost
Markup on cost	Price multiplier	Gross margin	Price on a $14,000 job
10%	1.10x	9.1%	$15,400
20%	1.20x	16.7%	$16,800
25%	1.25x	20.0%	$17,500
30%	1.30x	23.1%	$18,200
35%	1.35x	25.9%	$18,900
42.9%	1.43x	30.0%	$20,000
50%	1.50x	33.3%	$21,000
66.7%	1.67x	40.0%	$23,333
100%	2.00x	50.0%	$28,000

Markup and margin are not the same number

Markup is measured against what the job costs you. Margin is measured against what the customer pays. Because the price is always the bigger number, the same dollars are a smaller percentage of it. Add 50 percent to a $10,000 cost and you quote $15,000, of which $5,000 is profit. That is a 50 percent markup and a 33.3 percent margin, from one transaction.

The trap is that both are quoted as percentages and the words get swapped in conversation. A contractor who decides on a 30 percent margin and adds 30 percent to cost has priced a 23.1 percent margin instead. On a $14,000 job that is $18,200 rather than $20,000. After overhead the net falls from $2,000 to $560, so 72 percent of the profit is gone on a quote that looked 9 percent cheaper.

Overhead recovery is what turns gross profit into pay

Gross profit is not profit. It is the pool that has to cover rent, the truck, insurance, the phone, the estimator's time, the accountant and every hour nobody billed. The way to size that pool is to divide a year of overhead by a year of revenue. NAHB's Cost of Doing Business Study put operating expenses at 23.6 percent of revenue for remodelers in fiscal 2024 and 12.0 percent for single-family builders in fiscal 2023.

Subtract the overhead percentage from the margin and what is left is the net. A 30 percent margin against 20 percent overhead recovery nets 10 percent, which is $2,000 on a $20,000 quote. NAHB's own arithmetic works the same way: remodelers ran a 29.9 percent gross margin against 23.6 percent operating expenses in fiscal 2024, and netted 6.3 percent. If your target margin sits below your overhead percentage, every job you sell loses money, and selling more of them makes it worse faster.

What this calculator leaves out

It prices one job against an annual overhead rate. It does not handle a job that takes a year, retainage, or a draw schedule that runs the work on your cash. It has no contingency line: allowances for unknowns belong in job cost, not in the markup. It does not split the markup by bucket. Many contractors apply a full markup to material and their own labor and a lower one to subcontractor invoices. Sales commission, warranty reserve, financing fees and the cost of the estimate itself are all real and none of them appear here. Nor does it tell you what the market will pay. A correct price you cannot sell is not a price, and the fix is usually lower cost or a different customer, not a smaller margin.

Mistakes that cost money

Adding your target margin as a markup. Thirty percent added as markup returns a 23.1 percent margin and leaves $1,800 on a $14,000 job.
Marking up subs at the material rate. Their invoice already carries their own overhead and profit, so a full markup can price you out.
Leaving the owner's wage out of overhead. If it sits outside that number, the net here is your pay rather than profit.
Using last year's revenue in a slower year. Overhead recovery is a share of revenue, so fewer jobs raise the percent each one must carry.
Burying contingency inside the markup. An allowance for the unknown is a cost line, and hiding it in profit lets one surprise eat the margin.
Discounting the price without recomputing. Cutting a $20,000 quote by 10 percent takes $2,000 straight out of $6,000 of gross profit, a third of it.

Key facts

A 50 percent markup is a 33.3 percent gross margin, because markup is figured on cost and margin on the selling price.
Hitting a 30 percent gross margin takes a 42.9 percent markup, a 1.43 multiplier on job cost, not a 30 percent add.
NAHB's Cost of Doing Business Study put the average residential remodeler at a 29.9 percent gross margin and a 6.3 percent net margin for fiscal 2024.
Single-family home builders averaged a 20.7 percent gross margin, 12.0 percent operating expenses and an 8.7 percent net margin on $11.3 million of revenue for fiscal 2023.
Residential remodelers averaged $2.7 million of revenue and $646,000 of operating expenses for fiscal 2024, which is the overhead every job has to help carry.
Trade contractor costs fell from 36 percent of a residential remodeler's revenue in 2021 to 30 percent in 2024, according to NAHB.

Frequently asked questions

What is the difference between markup and margin?

Markup is a percentage of your cost, margin is a percentage of the price the customer pays. A 50 percent markup is a 33.3 percent margin. To hit a 30 percent margin you add 42.9 percent, not 30 percent.

What markup should a contractor use?

Work backward from the margin you need. NAHB put the average residential remodeler at a 29.9 percent gross margin in fiscal 2024, which takes a 42.7 percent markup. Single-family builders averaged 20.7 percent for fiscal 2023, which takes a 26.1 percent markup.

Is a 20 percent markup enough?

A 20 percent markup is a 16.7 percent margin. If your overhead runs 20 percent of revenue, that job loses money before anyone takes a wage. Overhead recovery comes out of the margin first, and only what is left is profit.

How do I figure my overhead percentage?

Divide a full year of overhead by a full year of revenue. If you carry $96,000 of overhead on $480,000 of revenue, that is 20 percent, and every quote has to recover it. Count the owner's wage as overhead or the net on this page is your pay, not profit.

Sources and references

Home remodeling profit margin jumps on demand and business practices (NAHB)
Remodelers saw profit margin gains in 2024, Cost of Doing Business Study (NAHB Eye on Housing)
Builders' profit margins improved in 2023, Cost of Doing Business Study (NAHB Eye on Housing)
NAHB study on builder financial performance and balance sheets (NAHB)

Next steps for this project

The usual order for a measurement & cost project. See all measurement & cost calculators.

Results are estimates based on standard formulas and typical product specifications. Confirm quantities with your supplier and local code before ordering.