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//// Business · Pricing

Contractor Markup vs Margin

Job cost + markup% → selling price and gross margin. Or enter margin to get markup.

Where this fits

📦 Business & Seller OpsGoing 1099FreelancersFounders

This tool lives inside Going 1099 and is most useful for freelancers and founders.

Corp Tax Rate21%
SE Threshold$400
FICA Cap 2024$168,600

Inputs

Selling price
$6,000.00
what you charge
Gross profit
$1,000.00
price minus cost
Markup
20.0%
on cost
Margin
16.7%
on price

Common markup → margin table

10% markup9.1% margin
15% markup13% margin
20% markup16.7% margin
25% markup20% margin
33.3% markup25% margin
50% markup33.3% margin
100% markup50% margin
1

Price from markup

price = cost × (1 + markup%)

= $5,000.00 × (1 + 20.0%)

= $6,000.00

Markup is calculated on cost

2

Gross profit

profit = price − cost

= $1,000.00

3

Gross margin

margin = profit ÷ price × 100

= $1,000.00 ÷ $6,000.00 × 100

= 16.7%

Margin is profit as a % of price — NOT the same as markup

4

Key relationship

margin% = markup% ÷ (1 + markup%)

= 20.0% ÷ (1 + 20.0%)

= 16.7%

A 20% markup = 16.7% margin. A 25% margin requires a 33.3% markup.

Key insight

Contractors who confuse markup and margin consistently underprice. If you want 20% margin, you need 25% markup — not 20% markup. Most residential contractors target 15–25% gross margin. Specialty and commercial work can support 20–35%.

Use this result in →

🔧Subcontractor Pricing Markup📋Change Order Pricer📊Overhead Calculator

#ShowYourWork

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