Understand the difference between markup and margin with a practical calculator for contractors, estimators, and builders.
MESLO Markup vs Margin Calculator
Markup and margin are often confused in construction estimating.
Markup is profit expressed as a percentage of cost.
Margin is profit expressed as a percentage of revenue.
That difference matters because a target 20% margin is not the same as a 20% markup.
MESLO Markup vs Margin Calculator
Use this calculator to understand the difference between markup and margin. In estimating, markup is applied to cost. Margin is measured against revenue.
Markup = Profit ÷ Cost
Margin = Profit ÷ Revenue
Price = Cost × (1 + Markup)
Required Markup = Margin ÷ (1 − Margin)
If you know your markup
Apply markup to cost, then see the resulting revenue, profit, and margin.
If you know your target margin
Enter the margin you want, then see the markup required to hit it.
Quick reference
| Markup | Equivalent Margin |
|---|---|
| 10% | 9.09% |
| 20% | 16.67% |
| 25% | 20.00% |
| 50% | 33.33% |
| 100% | 50.00% |
Why this matters
Estimators and business owners often say:
“We need 20% profit.”
But that can mean two different things:
- 20% markup
- 20% margin
Those two targets produce different bid prices.
MESLO interpretation
Within the MESLO framework:
- Material
- Equipment
- Subcontractors
- Labor
- Other Costs
- Insurance/Bond
- Overhead
- Profit
- Taxes
All roll into your cost structure first.
From there:
- Define total cost
- Apply markup
- Calculate final bid price
- Verify resulting margin
Markup is the pricing input.
Margin is the financial outcome.
Formulas
Markup:
markup = profit / cost
Margin:
margin = profit / revenue
Price from markup:
price = cost * (1 + markup)
Required markup from target margin:
required markup = margin / (1 - margin)
Practical example
If your project cost is $100,000 and you apply a 25% markup:
- Bid price = $125,000
- Profit = $25,000
- Margin = 20%
That is why a 20% target margin requires a 25% markup.
Use this before submitting bids
This calculator is most useful when:
- Building a master takeoff
- Checking pricing strategy
- Reviewing overhead recovery
- Comparing internal bid targets
- Training junior estimators