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Quote in markup. Run the business on margin.
Markup and margin measure the same profit from different bases — markup from cost, margin from price — and confusing them is one of the most common ways contractors and freelancers undercharge. This calculator works in all three directions: price a job from cost and markup, back into a price from a target margin, or dissect an existing quote into profit, markup, and margin. The overhead solver answers the harder question: given what it costs to run the business, what markup do you actually need?
Anyone who quotes prices uses this: supplier talks and accounting run on margin, price sheets run on markup, and mixing the two up is how a "profitable" job loses money. The overhead solver is the part people bookmark — it converts what the business costs to run into the markup every quote must carry.
25%. Price = cost ÷ (1 − 0.20) = 1.25 × cost. The general conversion is markup = margin ÷ (1 − margin), so a 20% margin needs 0.20 ÷ 0.80 = 25% markup.
Yes. Double your cost ($1,000 → $2,000) and the $1,000 profit is half of the selling price — a 50% margin. Doubling the price never means 100% margin; 100% margin would require a cost of zero.
Because your overhead — truck, insurance, office, taxes — eats a share of revenue (the selling price), not a share of cost. If overhead is 15% of revenue and you want 10% net profit, you need a 25% margin on every job, which means quoting a 33.3% markup on cost. Quote 25% markup instead and you get a 20% margin — 5 points short.
It varies by trade and region, but many residential contractors find they need gross margins in the 25–35% range to cover overhead and leave real net profit, which translates to markups of roughly 33–54% on cost. Use the overhead solver with your own numbers — averages are a starting point, not a budget.