Enter the job's direct costs and the markup you charge, and get the client price, the gross profit and the margin it really is. Or type the margin you want and get the markup that produces it. Contingency and sales tax are handled separately, because they are separate things.
Why the two numbers differ, and which one to quote: contingency vs markup, explained.
The same dollars, described two ways. Markup is measured against cost; margin against price. Quote a client a "20% markup" and think you are keeping 20% of the price, and you have just given away a sixth of your profit.
| Markup on cost | Gross margin on price | Price on $10,000 of cost | Gross profit | To keep this margin, mark up by |
|---|---|---|---|---|
| 10% | 9.1% | $11,000 | $1,000 | — |
| 15% | 13.0% | $11,500 | $1,500 | — |
| 20% | 16.7% | $12,000 | $2,000 | — |
| 25% | 20.0% | $12,500 | $2,500 | a 20% margin needs 25% markup |
| 30% | 23.1% | $13,000 | $3,000 | — |
| 35% | 25.9% | $13,500 | $3,500 | — |
| 40% | 28.6% | $14,000 | $4,000 | — |
| 43% | 30.0% | $14,300 | $4,300 | a 30% margin needs 43% markup |
| 50% | 33.3% | $15,000 | $5,000 | — |
| 67% | 40.0% | $16,700 | $6,700 | a 40% margin needs 67% markup |
| 100% | 50.0% | $20,000 | $10,000 | a 50% margin needs 100% markup |
markup = (price − cost) ÷ cost$12,500 price on $10,000 cost: (12,500 − 10,000) ÷ 10,000 = 25%.
margin = (price − cost) ÷ priceSame job: 2,500 ÷ 12,500 = 20%. Margin is always the smaller number.
margin = markup ÷ (1 + markup)0.25 ÷ 1.25 = 0.20. Handy when a supplier quotes you a markup and your books want a margin.
markup = margin ÷ (1 − margin)Want to keep 30% of the price? 0.30 ÷ 0.70 = 43% markup on cost.
price = cost ÷ (1 − margin)$10,000 cost at a 30% margin: 10,000 ÷ 0.70 = $14,286. Do not multiply cost by 1.30 — that gives 23%.
base = cost × (1 + contingency)Then markup goes on the base. Contingency is a cost allowance, not profit; if it is not spent it becomes profit, which is fine, but do not plan on it.
The right markup is not a rule of thumb. It is your overhead, spread across the work you actually do, plus the profit you want. Three numbers from last year's books get you there:
Then overhead ÷ direct costs is the markup you need just to break even, and profit goes on top. A business with $300,000 of direct costs and $75,000 of overhead needs a 25% markup before it has made a dollar; a 10% profit on top of that lands around 39% markup, which is a 28% margin. That is why "20% markup" — a number many contractors quote because it sounds reasonable — is often a slow way to go broke.
Where this lives in Estiquik: every estimate carries a markup and a contingency as separate fields, applied in this order, shown or hidden on the client's copy as you choose, and job costing reports the margin you actually made once the invoices and receipts are in. The calculator here is free for anyone; the app has a free plan too.
Markup is the amount you add to cost, expressed as a percentage of cost. Margin is the same dollars expressed as a percentage of the price. A 25% markup on $10,000 of cost gives a $12,500 price and $2,500 of gross profit — a 20% margin. Margin is always the smaller number.
Margin = markup ÷ (1 + markup). A 25% markup is 0.25 ÷ 1.25 = 20% margin. To go the other way, markup = margin ÷ (1 − margin): a 20% margin needs 0.20 ÷ 0.80 = 25% markup. The table above does the common ones.
Enough to cover overhead and leave a profit — which for small remodelers commonly means 20% to 50% markup on direct costs, because overhead alone often runs 15% to 30% of direct costs before any profit. Work out your own overhead percentage from last year's books rather than borrowing a number from a forum.
No. Contingency is a cost allowance for things you know you don't know yet — what is behind the drywall. Markup is overhead and profit on top of cost. This calculator applies contingency to cost first, then markup to the result, and reports both separately. Longer answer here.
Most contractors apply the same markup to every direct cost, including subs and materials, because managing, scheduling and guaranteeing that work is real overhead. Some use a lower markup on large pass-through items like cabinets or windows. Apply it consistently and say so in your contract.
Show sections and totals; the markup can be a line or can be folded into the unit prices, and both are honest. What matters is that the price covers it. Estiquik lets you show or hide the breakdown on the client's copy per estimate.
No. Tax is collected for the government and passed on; it is not revenue and never enters the markup or margin maths. The calculator adds it at the end so you can tell the client the total, and nothing else.
Estiquik carries markup and contingency on every estimate, fills in your region's tax, and tells you the margin you actually made when the job is done. Free plan, no card.