What Markup Gives a 20 Percent Margin?
Markup, against cost
25%
To keep 20 percent of the price, add exactly 25 percent to a $10,000 cost: $12,500.
How that number is worked out
These are the figures this page was built with and every line the calculator produces from them. Change anything above and all of it moves.
- Your cost for the job10000 $
- I want to setMargin percent
- That number20 % or $
Price to charge$12,500.00
| Your cost | $10,000.00 |
|---|---|
| Price | $12,500.00 |
| Gross profit | $2,500.00 |
| Markup, against cost | 25% |
| Margin, against price | 20%this is the one your accountant means |
| If you want this margin | Mark up cost by | On $10,000 cost, charge |
|---|---|---|
| 10% | 11.1% | $11,111.11 |
| 15% | 17.6% | $11,764.71 |
| 20% | 25% | $12,500.00 |
| 25% | 33.3% | $13,333.33 |
| 30% | 42.9% | $14,285.71 |
| 35% | 53.8% | $15,384.62 |
| 40% | 66.7% | $16,666.67 |
| 50% | 100% | $20,000.00 |
Margin compared
Going the other way, the required markup climbs much faster than the margin does.
| Margin | Price to charge | Markup, against cost |
|---|---|---|
| 10% margin | $11,111.11 | 11.1% |
| 20% margin | $12,500.00 | 25% |
| 30% margin | $14,285.71 | 42.9% |
| 40% margin | $16,666.67 | 66.7% |
| 50% margin | $20,000.00 | 100% |
What else matters here
This is the conversion every contractor should know by heart: twenty percent margin is a twenty five percent markup. Twenty and twenty five, clean, no rounding.
The mistake it prevents is the most expensive one in small contracting. Adding twenty percent to cost when you meant to keep twenty percent of the price gives you 16.7, and that shortfall of 3.3 points of margin is, for most small contractors, roughly their entire net profit.
Write the word down alongside the number in every contract and every internal estimate template. Not twenty percent, but twenty percent margin on price, or twenty five percent markup on cost. The two words do the work the number cannot.
What this calculator assumes
- Markup is measured against your cost. Margin is measured against the price. They are never the same number and confusing them is the most expensive arithmetic mistake in the trades.
- A 50 percent markup is a 33.3 percent margin. To actually keep 50 percent of the price you have to mark up by 100 percent.
Questions people ask
What markup gives a 20 percent margin?
Exactly 25 percent. On a $10,000 cost that is a $12,500 price and $2,500 of gross profit.
Is 20 percent markup the same as 20 percent margin?
No, and the difference is costly. A 20 percent markup yields only a 16.7 percent margin.
How do I avoid mixing them up?
Always write the word next to the number: markup on cost, or margin on price. A bare percentage is what causes the error.
The markup vs margin calculator takes any dimensions you like and hands back the same list.