Constructelligence
Overview
Free tools Pricing Demo Join the beta
Constructelligence › Free tools › Markup vs margin

Construction markup vs margin calculator

Markup and margin are not the same number, and pricing a job with one when you meant the other is how bids lose money. Enter direct cost, overhead, the margin you want and bond, and get the bid price, the markup it implies and the profit.

Free, no sign-upRuns in your browser — nothing is sent anywhereFormulas shownCopy a link to share your numbers
Tool 05

Markup vs margin & bid price

Markup and margin are not the same number, and pricing a 20% margin with a 20% markup leaves money on the table on every job. Enter your costs and the margin you want to keep.

Job costs

Result

Cost basis = direct cost × (1 + overhead %). Bid price = cost basis ÷ (1 − margin % − bond %). Markup = (bid − direct cost) ÷ direct cost. Margin = profit ÷ bid. A 20% margin needs a 25% markup; a 20% markup is only a 16.7% margin.

How to use it

  1. Enter the job’s direct cost.
  2. Enter overhead as a percentage of direct cost.
  3. Enter the gross margin you want to keep, and bond or insurance as a percentage.
  4. Read the bid price, the markup and the profit.

A worked example

To keep a 20% margin you need a 25% markup on cost; a 20% markup only gives a 16.7% margin. On a $1M direct cost that difference is $50K of profit.
Want the background? The guide works through the arithmetic, the mistakes that hide problems, and a checklist.
Read: Construction KPIs →

Questions

What is the difference between markup and margin?

Markup is profit as a percentage of cost; margin is profit as a percentage of price. The same dollars give a bigger markup percentage than margin percentage.

How do you convert markup to margin?

Margin = markup ÷ (1 + markup). A 25% markup is a 20% margin.

How do you convert margin to markup?

Markup = margin ÷ (1 − margin). A 20% margin needs a 25% markup.

How do you price a bid from cost?

Add overhead to direct cost, then divide by (1 − target margin − bond %) to get a bid price that keeps the margin you want.

More free calculators

Construction markup vs margin calculatorMarkup and margin are not the same number, and pricing a job with one when you meant the other is how bids…Contractor overhead recovery and break-even calculatorEvery job has to carry its share of the office. Enter annual overhead, revenue, the gross margin your jobs…Construction cost overrun calculatorFind out where a job will finish while there is still time to change it. Enter the budget, what has been…All free construction calculatorsEight tools, one page — overrun, WIP, schedule, labor, markup, change orders, pay apps, overhead.

Want this on your live data, every morning?

These tools are manual. The dashboard does the same arithmetic across every job, every company and every week — plus the money-at-risk view, the audit findings and the overrun radar. Join the private beta and we will connect it to the systems you already run.