Construction Markup Calculator for Trade Contractors

Markup and margin are different numbers and confusing them is one of the most common ways trade contractors undercharge for their work.

Enter your job cost and markup percentage to calculate sell price, gross margin, and gross margin percentage, so you know what you are actually making on every job.

What this calculation means

Markup is the percentage added to cost to arrive at the sell price. Margin is the percentage of the sell price that is gross profit. A 25% markup on a $100 cost produces a $125 sell price and a 20% margin, not a 25% margin. Confusing the two is common and expensive: a contractor targeting 30% margin who uses 30% markup is actually earning 23% margin, leaving real money on every job.

Why this number matters

Your overhead and profit target determine your minimum markup. If your overhead runs 20% of revenue and you want a 10% net profit, your minimum margin is 30% and your minimum markup is approximately 43%. Running jobs below that markup means you are working for less than your target. The calculator shows the relationship between markup and margin so you can check your pricing before submitting a bid.

Common calculation mistakes

How to use this calculation

1. Establish your overhead percentage

   Sum all overhead costs for the year. Divide by target revenue. This is your overhead percentage.
2. Add your target net profit percentage

   Set a target net profit margin. Ten to fifteen percent is a common target for specialty trade contractors.
3. Calculate the required gross margin

   Required gross margin equals overhead percentage plus net profit percentage. This is the margin you need to cover overhead and hit your profit target.
4. Convert gross margin to markup

   Markup equals gross margin divided by (1 minus gross margin). A 30% margin target requires approximately a 43% markup on cost.
5. Apply consistently and review quarterly

   Apply the calculated markup to all job costs. Review quarterly: if overhead or costs change, recalculate the required markup to maintain your margin target.

Where Scaftra automates this

Scaftra tracks job costs against the contract value for every project, showing real-time gross margin per job. When your actual cost differs from estimate, you see the margin impact immediately, not at job close.

Related features

• Job costing: Scaftra tracks actual cost against estimated cost per job, showing margin in real time rather than at closeout.
• Budget tracking: Project budget against actual spend gives the PM early warning when cost is running over estimate.
• Change order margin tracking: Approved change orders are tracked against their cost, so the margin on change order work is visible separately from original scope.

What getting this right delivers

• Correct markup applied every bid: no undercharging because you confused markup and margin.
• Overhead covered before profit: a markup built from overhead plus profit target ensures the business runs on the margin it needs.
• Real-time margin visibility: know your margin while the job is running, not after it closes.

Who uses this calculator

• Specialty trade contractors pricing their own work.If you are setting prices from your own cost estimates, you need to know the relationship between your markup and your actual margin.
• Business owners reviewing job profitability.Post-job review against target margin tells you whether your markup is working or whether costs are running over estimate.
• Controllers or accountants setting pricing policy.A pricing policy based on a target gross margin needs the markup formula to translate from margin target to price multiplier.

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