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TL;DR: This free calculator converts between markup and margin for construction subcontractors. Enter your markup percentage, overhead rate, and target net profit to see your gross margin, the markup needed to hit your target, and whether current bids are covering overhead plus profit.
Free Calculator
Markup vs Margin
Calculator.
Enter your numbers. See exactly what gross margin your markup produces and what markup you actually need to cover overhead and hit your target net profit.
Published: May 2026 · Updated: May 2026
FAQ
Frequently Asked Questions
How do I convert markup to margin?
Margin = markup divided by (1 + markup). A 25% markup equals 25 divided by 125 = 20% margin. A 33% markup equals 24.8% margin. To go the other direction: markup = margin divided by (1 minus margin). A 25% margin requires a 33.3% markup.
What markup do I need to hit my target gross margin?
Markup = target margin divided by (1 minus target margin). To hit 25% gross margin you need 33.3% markup. To hit 20% gross margin you need 25% markup. Enter your overhead rate and target net profit above and the calculator shows you the exact markup needed.
How much markup should a construction subcontractor use?
It depends on your overhead rate and target net profit. If your overhead rate is 14% and you want 8% net profit, you need 22% gross margin which requires a 28.2% markup. Most subcontractors significantly underestimate the markup needed because they confuse markup with margin.
Why is my gross margin lower than my markup percentage?
Because markup is calculated on cost and margin is calculated on revenue. A 20% markup adds 20 dollars to every 100 dollars of cost, producing a 120 dollar price and a 16.7% margin. The two numbers are never equal. The higher the markup, the closer they get but they never converge.
