Markup is not margin. This shows you the gap.
Add 20% to your cost and you do not make 20%. You make 16.7%. On a $250,000 year that difference is real money, and most contractors never see it leave. Enter one job below.
$
%
Price to charge
$12,500
Gross profit
$2,500
True margin
20.0%
Markup applied
25.0%
What the mix-up costs you
If you priced this job at cost plus 20% thinking that was your margin, you would have charged $12,000 and kept 16.7% instead.
$500
left on the table, on this job alone
Margin to markup, at a glance
| If you want this margin | You must add this markup | On $10,000 cost, charge |
|---|
Read the full breakdown: How to Price a Construction Job (Without Guessing)
Pricing every job by hand?
The Construction Estimating Spreadsheet runs this math on every line item, then builds the proposal for you. Excel and Google Sheets.