Contractor Markup & Profit Margin Calculator
Calculate markup percentage, profit margin, and selling price for contractor jobs. Enter your total job cost and either your desired markup or selling price.
All direct costs: labor, materials, subcontractors, equipment
Your overhead as a % of job cost (office, insurance, vehicles, etc.)
Choose one: enter Markup % OR Selling Price
Markup is applied on top of total cost (cost + overhead)
The price you charge the client
Sales tax applied to material portion of job cost
Used to calculate tax on materials only
Formulas Used
Overhead Cost = Job Cost × (Overhead Rate ÷ 100)
Material Tax = Job Cost × (Materials %) × (Tax Rate ÷ 100)
Total Cost = Job Cost + Overhead Cost + Material Tax
Selling Price = Total Cost × (1 + Markup ÷ 100)
Gross Profit ($) = Selling Price − Total Cost
Markup % = (Gross Profit ÷ Total Cost) × 100 → profit over cost
Profit Margin % = (Gross Profit ÷ Selling Price) × 100 → profit as share of revenue
Key distinction: A 25% markup yields a 20% margin. Markup is always higher than margin for the same dollar profit.
Assumptions & References
- Overhead rate is expressed as a percentage of direct job cost (not of revenue).
- Markup is calculated on total cost (direct cost + overhead + tax), not on direct cost alone.
- Profit margin is always calculated on the selling price (revenue), per standard accounting practice.
- Industry benchmark: General contractors typically target 15–20% profit margin; specialty trades 20–35% (NAHB, Remodeling Magazine Cost vs. Value Report).
- Material sales tax applies only to the material portion of job cost; labor is typically not taxed.
- This calculator computes gross profit margin. Net profit margin will be lower after business taxes and owner compensation.
- Reference: Construction Financial Management Association (CFMA) — Financial Benchmarker.