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Construction markup calculator
A 20% markup is a 16.7% margin. That gap, repeated across a year of bids, is the difference between a busy company and a profitable one. Price a job both ways, then work backwards from the overhead you actually carry.
Markup and margin on one job
Price at 20% markup
$12,000.00
Gross profit $2,000.00 — a margin of 16.67%, not 20%.
Price for a 20% margin
$12,500.00
Requires a markup of 25% on cost.
The difference between those two prices — $500.00 on this job — is the money lost by treating markup and margin as the same word.
The markup your overhead actually requires
Most bids are marked up by habit. This works backwards from what the business needs: overhead as a share of sales, plus the net profit you intend to keep.
Required markup on cost
53.85%
On $10,000.00 of cost that is a bid of $15,384.62 — versus $12,000.00 at your current 20%.
Break-even volume
At your 20% markup — a gross margin of 16.67% — this is the revenue needed before the year clears zero.
Break-even revenue
$1,080,000
Every field takes arithmetic — type 42000+8500 and it adds. Nothing here is sent anywhere; the math runs in your browser.
Markup and margin, side by side
| Markup on cost | Resulting margin | Price on $10,000 cost |
|---|---|---|
| 10% | 9.1% | $11,000 |
| 15% | 13.0% | $11,500 |
| 20% | 16.7% | $12,000 |
| 25% | 20.0% | $12,500 |
| 35% | 25.9% | $13,500 |
| 50% | 33.3% | $15,000 |
| 54% | 35.1% | $15,400 |
| 100% | 50.0% | $20,000 |
Once the markup is right, the place it has to live is the estimate itself. BuiltSum applies burden and markup per line and carries the result into a proposal — try it on the estimate builder, or price commercial work through the pay application generator.
Frequently asked questions
What is the difference between markup and margin in construction?
Markup is measured against your cost; margin is measured against the price you charge. Add 20% markup to a $10,000 job and you bill $12,000 — the $2,000 profit is 20% of cost but only 16.7% of the $12,000 price. To actually keep 20% of the price you must mark up 25%. Contractors who quote a 'twenty percent job' while thinking in margin lose the difference on every invoice.
What markup should a contractor use?
The one your overhead requires, not a number from a forum. If overhead runs 25% of sales and you want to keep 10% net, you need roughly 54% markup on cost — because overhead and profit both have to come out of the same gap between cost and price. The middle calculator on this page does that arithmetic; the honest answer for most small contractors is that their habitual 15-20% markup does not cover their own overhead.
Does markup include labor burden?
It should not have to. Burden — payroll taxes, workers' compensation, general liability, vacation — is a cost of the labor itself, so it belongs in the cost side before markup is applied. Contractors who leave burden out and try to cover it with markup are hiding a 20-35% labor cost inside a number they also expect to carry overhead and profit.
How do I know if my markup is working?
Compare the year's gross margin against overhead. Break-even revenue is annual overhead divided by gross margin: $180,000 of overhead at a 16.7% margin needs over $1.07 million of work before you earn a dollar. If that number is larger than the volume you can physically deliver, the markup is wrong — not the sales effort.
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