Contractor Pricing Markup Guide

Use this guide to understand the relationship between job cost, markup, selling price, gross profit, and gross margin before you price a construction job.

Start with the contractor pricing calculator

Enter the total job cost and the markup percentage in the ATHENA Contractor Pricing Calculator. The tool calculates the selling price, gross profit, and gross margin from those inputs.

How contractor markup works

Markup is the percentage added to your cost to arrive at a selling price.

Selling price = job cost × (1 + markup ÷ 100)

Example: $10,000 job cost with 20% markup

A $10,000 job cost with a 20% markup produces a $12,000 selling price. Gross profit is $2,000. Gross margin is 16.67% because gross margin is measured against the selling price, not the original cost.

Markup vs. gross margin

Markup and gross margin are related but different measurements. Markup is based on cost. Gross margin is gross profit divided by the final selling price.

Gross margin = gross profit ÷ selling price

How to convert a target margin to markup

When you start with a target gross margin instead of a markup, the two percentages are not interchangeable. A 20% target gross margin requires a 25% markup on cost.

Markup = target margin ÷ (1 − target margin)

What should be included in job cost?

The calculator is only as useful as the cost entered. Make sure your job-cost figure reflects the costs you intend to recover through the selling price, using the same cost categories consistently from estimate to estimate.

Use markup as a pricing check

Before sending a proposal, review the entered cost, markup, selling price, and resulting gross margin together. This makes it easier to spot a missed cost or an unexpected margin change before the price reaches the customer.

Ready to run the numbers?

Use the Free Contractor Pricing Calculator for your next estimate.

Compare contractor estimating tools on Amazon (paid link)

As an Amazon Associate I earn from qualifying purchases.