{"id":5333,"date":"2026-07-08T09:00:00","date_gmt":"2026-07-08T09:00:00","guid":{"rendered":"https:\/\/www.simplywise.com\/blog\/?p=5333"},"modified":"2026-07-08T17:04:53","modified_gmt":"2026-07-08T17:04:53","slug":"how-to-set-markup-price-jobs-for-profit","status":"publish","type":"post","link":"https:\/\/www.simplywise.com\/blog\/how-to-set-markup-price-jobs-for-profit\/","title":{"rendered":"Contractor Markup: How to Set It and Price Jobs for Profit"},"content":{"rendered":"<p><script>\ndocument.addEventListener('DOMContentLoaded', function() {\n  var sels = ['.entry-header','.page-header','article > h1:first-child','.entry-footer'];\n  sels.forEach(function(s){document.querySelectorAll(s).forEach(function(el){el.style.display='none';});});\n  var el = document.querySelector('.sw-a');\n  while (el && el !== document.body) {\n    el.style.maxWidth='100%'; el.style.width='100%'; el.style.padding='0'; el.style.margin='0';\n    el.style.float='none'; el.style.flex='0 0 100%';\n    el = el.parentElement;\n  }\n  document.body.style.marginTop='0'; document.body.style.paddingTop='0';\n});\n<\/script>\n<link href=\"https:\/\/fonts.googleapis.com\/css2?family=Inter:wght@400;500;600;700;800&#038;display=swap\" rel=\"stylesheet\">\n<!-- 02 Article Template, crash-course format. 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a{color:var(--blue-dark);font-weight:600;text-decoration:none;} .sw-a .sw-a__sources a:hover{text-decoration:underline;} @media (max-width:640px){.sw-a .sw-a__sources{padding:20px 18px 16px;margin:28px auto 4px;}.sw-a .sw-a__sources ul li{font-size:13.5px;}}\n.sw-a__tldr-cta{display:flex;align-items:center;justify-content:space-between;gap:16px;flex-wrap:wrap;border-top:1px solid var(--tldr-bd);padding-top:16px;margin-top:2px;}.sw-a__tldr-cta span{color:var(--ink);font-size:15px;line-height:1.5;font-weight:500;}.sw-a__tldr-cta a{display:inline-flex;align-items:center;white-space:nowrap;padding:10px 20px;border-radius:8px;font-size:14px;font-weight:600;background:#2563eb;color:#fff;text-decoration:none;border:none;}.sw-a__tldr-cta a:hover{color:#fff;}.sw-a__hero-cta{display:flex;flex-direction:column;align-items:center;gap:9px;margin:4px 0 10px;}.sw-a__hero-cta a{display:inline-flex;align-items:center;gap:8px;padding:14px 28px;border-radius:10px;font-size:16px;font-weight:700;background:var(--blue);color:#fff;text-decoration:none;border:none;}.sw-a__hero-cta a:hover{color:#fff;background:var(--blue-dark);}.sw-a__hero-cta-note{font-size:13px;color:var(--muted);}.sw-a__hero-cta-note b{color:var(--ink);font-weight:700;}<\/style>\n<p><script>\n(function(){\n  try{\n    var b=document.body;\n    if(b && b.classList){b.classList.add('single-post');}\n  }catch(e){}\n})();\n<\/script><\/p>\n<article class=\"sw-a\">\n<section class=\"sw-a__hero\">\n<div class=\"sw-a__inner\">\n<div class=\"sw-a__breadcrumb\">Blog &nbsp;&rsaquo;&nbsp; Business &amp; Growth<\/div>\n<p>    <span class=\"sw-a__eyebrow\">Pricing &middot; Protect Your Margin<\/span><\/p>\n<h1>Contractor Markup: How to Set It and Price Jobs for Profit<\/h1>\n<p class=\"sw-a__subtitle\">Markup and margin are not the same number, and mixing them up costs real money. Here is the plain math behind contractor markup and the six steps to price every job for profit.<\/p>\n<div class=\"sw-a__hero-cta\"><a href=\"https:\/\/swcostestimator.app.link\/ce-ai\" target=\"_blank\" rel=\"noopener\">Start Estimating Free &rarr;<\/a><span class=\"sw-a__hero-cta-note\">Free to try &middot; <b>4.8<\/b> on the App Store<\/span><\/div>\n<div class=\"sw-a__meta\">\n      <span>SimplyWise<\/span><br \/>\n      <span class=\"sw-a__dot\"><\/span><br \/>\n      <span>Updated July 8, 2026<\/span><br \/>\n      <span class=\"sw-a__dot\"><\/span><br \/>\n      <span>5 min read<\/span>\n    <\/div>\n<figure class=\"sw-a__hero-figure\">\n      <img decoding=\"async\" src=\"https:\/\/images.unsplash.com\/photo-1711437757492-d32d660495db?w=960&#038;q=80\" alt=\"Cash and a calculator on a concrete block, the raw inputs of contractor markup\" loading=\"eager\"><br \/>\n    <\/figure>\n<\/p><\/div>\n<\/section>\n<section class=\"sw-a__tldr\">\n<div class=\"sw-a__tldr-box\">\n<div class=\"sw-a__tldr-label\">Contractor markup at a glance<\/div>\n<div class=\"sw-a__tldr-body\">\n<ol>\n<li>Markup is figured on your cost. Margin is figured on your price. They are never the same number.<\/li>\n<li>Add up a year of overhead and find your overhead rate. Your markup covers that before any profit.<\/li>\n<li>A 25% markup gives a 20% margin. Want a true 20% margin? You need a 25% markup.<\/li>\n<li>Test the new price on three bids, then review your numbers every quarter.<\/li>\n<\/ol><\/div>\n<div class=\"sw-a__tldr-cta\"><span>Real pricing starts with real cost numbers.<\/span><a href=\"https:\/\/swcostestimator.app.link\/ce-ai\">Price Jobs From a Photo<\/a><\/div>\n<\/p><\/div>\n<\/section>\n<section class=\"sw-a__body\">\n<div class=\"sw-a__inner\">\n<h2>The markup mistake that eats your profit<\/h2>\n<p>An electrician we know ran a busy crew for three years and billed over $600,000 a year. Every December his accountant gave him the same news: he barely broke even. The problem was not his work. It was his contractor markup. He added 30% to his costs and believed that meant 30% profit. It does not. A 30% markup works out to about a 23% margin. Run his year as a worked example: a 30% markup on $600,000 of revenue leaves about $138,500 of gross profit. A true 30% margin would be $180,000. He was more than $40,000 short of the number in his head, every single year.<\/p>\n<p>Bad markup math also compounds every other pricing error on the job. If your estimates leak too, read the <a href=\"https:\/\/www.simplywise.com\/blog\/estimate-mistakes-contractors-how-to-fix\/\">estimate mistakes contractors make<\/a> and fix both ends at once.<\/p>\n<h2>Markup vs margin: the two numbers that get mixed up<\/h2>\n<p><strong>Markup<\/strong> is the percentage you add to your costs to reach the selling price. Cost $40,000, add a 25% markup: $40,000 x 1.25 = $50,000.<\/p>\n<p><strong>Margin<\/strong> is the share of the selling price that is profit. That same job earns $10,000 on a $50,000 price: $10,000 \/ $50,000 = 20%.<\/p>\n<p>So a 25% markup produced a 20% margin. Every markup produces a smaller margin, and the gap grows as the numbers climb. This is the whole reason contractor markup trips people up. Two formulas convert between them:<\/p>\n<ul>\n<li><strong>Markup to margin:<\/strong> margin = markup \/ (1 + markup). Example: 0.25 \/ 1.25 = 0.20, a 20% margin.<\/li>\n<li><strong>Margin to markup:<\/strong> markup = margin \/ (1 &#8211; margin). Example: 0.20 \/ 0.80 = 0.25, a 25% markup.<\/li>\n<\/ul>\n<table>\n<thead>\n<tr>\n<th scope=\"col\">Markup<\/th>\n<th scope=\"col\">Margin<\/th>\n<th scope=\"col\">On a $40,000 cost<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>10%<\/td>\n<td>9.1%<\/td>\n<td>Price $44,000, profit $4,000<\/td>\n<\/tr>\n<tr>\n<td>20%<\/td>\n<td>16.7%<\/td>\n<td>Price $48,000, profit $8,000<\/td>\n<\/tr>\n<tr>\n<td>25%<\/td>\n<td>20%<\/td>\n<td>Price $50,000, profit $10,000<\/td>\n<\/tr>\n<tr>\n<td>50%<\/td>\n<td>33.3%<\/td>\n<td>Price $60,000, profit $20,000<\/td>\n<\/tr>\n<tr>\n<td>100%<\/td>\n<td>50%<\/td>\n<td>Price $80,000, profit $40,000<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h2>How to set your contractor markup in 6 steps<\/h2>\n<p>Grab last year&#8217;s numbers and 30 minutes. The same steps work for any trade.<\/p>\n<ol class=\"sw-a__steps\">\n<li>\n<h3>Add up a year of overhead<\/h3>\n<p>Overhead is everything you pay to stay in business even when no job is running: the truck, insurance, phone, software, licenses, marketing, your accountant, and your own unbillable hours spent estimating and invoicing. Pull 12 months of it and total it. Not sure a cost counts? The IRS keeps a plain list of business expense categories (see Sources below).<\/p>\n<\/li>\n<li>\n<h3>Find your overhead rate<\/h3>\n<p>Divide annual overhead by annual direct costs, the money that goes straight into jobs. Worked example: $108,000 of overhead against $450,000 of direct costs is $108,000 \/ $450,000 = 24%. Every job has to carry that 24% before you earn a dime of profit.<\/p>\n<\/li>\n<li>\n<h3>Pick a profit target and convert it to markup<\/h3>\n<p>Many small contractors aim for 10 to 15% net profit after every cost is paid. Convert the margin you want into markup with the formula above. A 20% margin needs a 25% markup, because 0.20 \/ 0.80 = 0.25. A 15% target works out to about a 17.6% markup.<\/p>\n<\/li>\n<li>\n<h3>Price the job: overhead first, then profit<\/h3>\n<p>Worked example on a bathroom remodel with $18,000 in direct costs. Overhead at 24% adds $4,320, so break even is $22,320. Add 15% profit on the break even number, $3,348, and the price is $25,668. That is $25,668 \/ $18,000 = 1.426, about a 43% total markup on direct costs.<\/p>\n<p style=\"margin-top:16px;\">The price is only as good as that first cost number. The SimplyWise Cost Estimator turns a photo of the job into an itemized estimate in about 6 seconds, so the math starts from real costs.<\/p>\n<p style=\"text-align:center;margin-top:14px;\"><a href=\"https:\/\/swcostestimator.app.link\/ce-ai\" style=\"display:inline-flex;align-items:center;gap:8px;padding:14px 24px;border-radius:8px;font-size:15px;font-weight:600;background:#2563eb;color:#fff;text-decoration:none;border:none\">Estimate From a Photo<\/a><\/p>\n<\/li>\n<li>\n<h3>Test the price on your next three bids<\/h3>\n<p>Send three bids at the new number and watch what happens. Win almost everything and you are priced too low. Many contractors treat winning about a third of their bids as healthy. Lose them all and the problem may be presentation, not math. Our guide to <a href=\"https:\/\/www.simplywise.com\/blog\/how-to-bid-construction-job-guide\/\">bidding construction jobs<\/a> covers how to present the number.<\/p>\n<\/li>\n<li>\n<h3>Review your numbers every quarter<\/h3>\n<p>Overhead moves. Insurance renews higher, fuel jumps, and a slow quarter shrinks revenue while overhead stays put. Every 90 days, recompute your overhead rate and compare estimated versus actual costs on finished jobs. Then defend what you built with these <a href=\"https:\/\/www.simplywise.com\/blog\/10-ways-protect-profit-margin-contractors-2026\/\">10 ways to protect your profit margin<\/a>.<\/p>\n<\/li>\n<\/ol>\n<h2>Keep your contractor markup honest with SimplyWise<\/h2>\n<p>Markup only works when the cost numbers under it are real. SimplyWise captures every receipt, tracks your mileage, and turns a photo of the job into an itemized estimate in about 6 seconds. Your overhead rate and your job costs come from records instead of memory, and it is free to try.<\/p>\n<p style=\"text-align:center;margin-top:28px;\"><a href=\"https:\/\/swcostestimator.app.link\/ce-ai\" style=\"display:inline-flex;align-items:center;gap:8px;padding:14px 24px;border-radius:8px;font-size:15px;font-weight:600;background:#2563eb;color:#fff;text-decoration:none;border:none\">Try the Cost Estimator Free<\/a><\/p>\n<div class=\"sw-a__sources\">\n<h2>Sources<\/h2>\n<ul>\n<li><a href=\"https:\/\/www.irs.gov\/forms-pubs\/guide-to-business-expense-resources\" target=\"_blank\" rel=\"noopener\">IRS, Guide to Business Expense Resources<\/a> (the plain reference for which costs count as business expenses when you build your overhead list). Checked July 8, 2026.<\/li>\n<li><a href=\"https:\/\/www.sba.gov\/business-guide\/manage-your-business\/marketing-sales\" target=\"_blank\" rel=\"noopener\">U.S. Small Business Administration, Business Guide: Marketing and Sales<\/a> (SBA guidance on writing a pricing strategy into your plan). Checked July 8, 2026.<\/li>\n<li>Every dollar figure on this page is a worked example for illustration, and every percentage range is practice guidance, not survey data.<\/li>\n<\/ul>\n<\/div><\/div>\n<\/section>\n<section class=\"sw-a__pull\">\n<blockquote><p>\n    You cannot protect a margin you never calculated. Overhead first, profit second, then price with confidence.\n  <\/p><\/blockquote>\n<p>  <cite>SimplyWise Editorial<\/cite><br \/>\n<\/section>\n<section class=\"sw-a__faq\">\n<h2>Frequently asked questions about contractor markup<\/h2>\n<div class=\"sw-a__faq-list\">\n<h3 class=\"sw-a__faq-cat\">Margins and markup<\/h3>\n<details>\n<summary>What is a good profit margin for a contractor?<\/summary>\n<div class=\"sw-a__faq-answer\">\n<p>Many small contractors aim for 10 to 15% net profit after every cost is paid, including overhead and your own salary. If you are consistently under 8%, your markup is probably not covering your true overhead.<\/p>\n<\/p><\/div>\n<\/details>\n<details>\n<summary>Is a 50% markup too high?<\/summary>\n<div class=\"sw-a__faq-answer\">\n<p>Not on its own. A 50% markup works out to a 33.3% margin, which is common practice in remodeling and service trades. What matters is whether the price covers your overhead, pays you a fair profit, and still wins work in your market.<\/p>\n<\/p><\/div>\n<\/details>\n<h3 class=\"sw-a__faq-cat\">Subs and clients<\/h3>\n<details>\n<summary>Should I mark up subcontractor costs?<\/summary>\n<div class=\"sw-a__faq-answer\">\n<p>Yes. You coordinate the schedule, manage the quality, and carry insurance for the whole project. Many general contractors add 10 to 20% to subcontractor quotes. Passing sub costs through with no markup means you manage that work for free.<\/p>\n<\/p><\/div>\n<\/details>\n<details>\n<summary>Should I show my markup to clients?<\/summary>\n<div class=\"sw-a__faq-answer\">\n<p>Usually no. Present the price by line item, such as labor, materials, and scope, without printing your markup percentage. If a client wants open book, cost-plus pricing, that is a different contract, and the markup rate gets negotiated up front.<\/p>\n<\/p><\/div>\n<\/details><\/div>\n<\/section>\n<section class=\"sw-a__finalcta\">\n  <span class=\"sw-a__eyebrow\">Price every job right<\/span><\/p>\n<h2>Know your numbers. Keep your profit.<\/h2>\n<p>Snap a photo of the job and get an itemized estimate in about 6 seconds. Set a contractor markup that covers your overhead and pays you first. Free to try, no credit card.<\/p>\n<div class=\"sw-a__cta-buttons\">\n    <a href=\"https:\/\/swcostestimator.app.link\/ce-ai\" style=\"display:inline-flex;align-items:center;gap:8px;padding:14px 24px;border-radius:8px;font-size:15px;font-weight:600;background:#2563eb;color:#fff;text-decoration:none;border:none\">Try SimplyWise Free<\/a>\n  <\/div>\n<\/section>\n<\/article>\n<p><script type=\"application\/ld+json\">\n{\n  \"@context\": \"https:\/\/schema.org\",\n  \"@type\": \"Article\",\n  \"headline\": \"Contractor Markup: How to Set It and Price Jobs for Profit\",\n  \"description\": \"Contractor markup explained in plain math: markup vs margin, your overhead rate, and 6 steps to price every job for profit.\",\n  \"author\": {\"@type\": \"Organization\", \"name\": \"SimplyWise\"},\n  \"publisher\": {\"@type\": \"Organization\", \"name\": \"SimplyWise\", \"logo\": {\"@type\": \"ImageObject\", \"url\": \"https:\/\/simplywise.com\/logo.png\"}},\n  \"datePublished\": \"2026-07-08\",\n  \"dateModified\": \"2026-07-08\",\n  \"mainEntityOfPage\": {\"@type\": \"WebPage\", \"@id\": \"https:\/\/www.simplywise.com\/blog\/how-to-set-markup-price-jobs-for-profit\/\"},\n  \"image\": \"https:\/\/images.unsplash.com\/photo-1711437757492-d32d660495db?w=960&q=80\"\n}\n<\/script><\/p>\n<p><script type=\"application\/ld+json\">\n{\n  \"@context\": \"https:\/\/schema.org\",\n  \"@type\": \"HowTo\",\n  \"name\": \"How to set your contractor markup in 6 steps\",\n  \"description\": \"Set a contractor markup that covers overhead and pays a real profit: total a year of overhead, find your overhead rate, convert your profit target to markup, price the job, test it on three bids, and review quarterly.\",\n  \"step\": [\n    {\"@type\": \"HowToStep\", \"position\": 1, \"name\": \"Add up a year of overhead\", \"text\": \"Total 12 months of everything you pay to stay in business even when no job is running: truck, insurance, phone, software, licenses, marketing, accounting, and your own unbillable hours.\"},\n    {\"@type\": \"HowToStep\", \"position\": 2, \"name\": \"Find your overhead rate\", \"text\": \"Divide annual overhead by annual direct costs. For example, $108,000 of overhead against $450,000 of direct costs is a 24% overhead rate that every job must carry.\"},\n    {\"@type\": \"HowToStep\", \"position\": 3, \"name\": \"Pick a profit target and convert it to markup\", \"text\": \"Choose the net margin you want, then convert it with markup = margin \/ (1 - margin). A 15% margin needs about a 17.6% profit markup.\"},\n    {\"@type\": \"HowToStep\", \"position\": 4, \"name\": \"Price the job: overhead first, then profit\", \"text\": \"Apply your overhead rate to direct costs to reach break even, then add your profit markup on top. Example: $18,000 direct costs plus 24% overhead is $22,320, plus 15% profit is $25,668.\"},\n    {\"@type\": \"HowToStep\", \"position\": 5, \"name\": \"Test the price on your next three bids\", \"text\": \"Send three bids at the new number. Winning almost everything means you are priced too low. Many contractors treat winning about a third of their bids as healthy.\"},\n    {\"@type\": \"HowToStep\", \"position\": 6, \"name\": \"Review your numbers every quarter\", \"text\": \"Every 90 days, recompute your overhead rate and compare estimated versus actual costs on finished jobs, then adjust your markup.\"}\n  ]\n}\n<\/script><\/p>\n<p><script type=\"application\/ld+json\">\n{\n  \"@context\": \"https:\/\/schema.org\",\n  \"@type\": \"FAQPage\",\n  \"mainEntity\": [\n    {\"@type\": \"Question\", \"name\": \"What is a good profit margin for a contractor?\", \"acceptedAnswer\": {\"@type\": \"Answer\", \"text\": \"Many small contractors aim for 10 to 15% net profit after every cost is paid, including overhead and your own salary. If you are consistently under 8%, your markup is probably not covering your true overhead.\"}},\n    {\"@type\": \"Question\", \"name\": \"Is a 50% markup too high?\", \"acceptedAnswer\": {\"@type\": \"Answer\", \"text\": \"Not on its own. 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Here is the plain math behind contractor markup and the six steps to price every job for profit. Start [&hellip;]<\/p>\n","protected":false},"author":13,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_yoast_wpseo_focuskw":"contractor markup","_yoast_wpseo_title":"Contractor Markup: How to Set It and Price Jobs for Profit","_yoast_wpseo_metadesc":"Contractor markup explained in plain math: markup vs margin, your overhead rate, and 6 steps to price every job for profit. Photo estimator free to try.","_yoast_wpseo_linkdex":"72","_yoast_wpseo_content_score":"30","_yoast_wpseo_meta-robots-noindex":"","inline_featured_image":false,"footnotes":""},"categories":[182],"tags":[],"class_list":["post-5333","post","type-post","status-publish","format-standard","hentry","category-business-growth"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.2 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Contractor Markup: How to Set It and Price Jobs for Profit<\/title>\n<meta name=\"description\" content=\"Contractor markup explained in plain math: markup vs margin, your overhead rate, and 6 steps to price every job for profit. 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