Pricing a job correctly can make or break your business. A Construction Markup Calculator helps you set the right price by ensuring your costs are covered and you’re making a healthy profit.
How to Calculate Markup
- Determine Total Costs – Add up all expenses, including materials, labor, permits, equipment, and overhead.
- Set Your Profit Goal – Decide how much profit you want to make on the project.
- Calculate Markup – Use the formula below to determine how much to add on top of your costs.
Formula
Markup (%)=(Profit/Total Costs)×100
Example
If a project costs $40,000 and you want to make $10,000 in profit:
- Markup Percentage: ($10,000 ÷ $40,000) × 100 = 25%
- Final Price: $40,000 + (25% of $40,000) = $50,000
Markup vs. Profit Margin – What’s the Difference?
Many contractors confuse markup with profit margin:
- Markup is how much you increase your costs to set a final price.
- Profit Margin is the percentage of revenue that remains as profit after all expenses.
For example, a 25% markup does not mean a 25% profit margin. A 25% markup on $40,000 results in a 20% profit margin on the final price of $50,000.
Why Use a Markup Calculator?
- Price jobs accurately – Avoid underbidding and leaving money on the table.
- Cover all costs – Make sure overhead and unexpected expenses are factored in.
- Hit your profit goals – Stay profitable on every project, big or small.
Setting the right markup ensures you’re running a profitable business, not just covering costs. Use a markup calculator to take the guesswork out of pricing and stay ahead in the industry
