Subcontractor Margin Calculator
Mark up subcontracted work correctly: see the client price, your margin and markup when you resell someone else’s hours.
How it works
Markup mode: price = cost × (1 + markup%) · Margin mode: price = cost ÷ (1 − margin%) · Profit = price − cost
When you resell a subcontractor’s work you add a margin to cover management, risk and warranty — you own the client relationship and the outcome, not just the pass-through cost. Pricing by markup adds a percentage on top of their cost; pricing by margin works back from the share of the client price you want to keep. The two produce different numbers for the same intent: a 30% markup is only a 23% margin, so decide which base you mean before you quote.
Worked example
A subcontractor charges you $4,000. A 30% markup prices the client at $5,200, keeping $1,200 — which is a 23.1% margin. To instead keep a 25% margin, you would price at 4,000 ÷ 0.75 = $5,333.
Frequently asked questions
How much should I mark up a subcontractor?
Enough to cover the management, risk and warranty you take on by standing between the client and the sub — commonly 15–50%. You are responsible for the result, so the markup is not just profit, it is payment for that risk.
Markup or margin — which should I use?
Margin is usually the cleaner target because it reflects what you keep of the client price. A 30% markup sounds bigger than a 25% margin but is actually smaller (23%), so be clear which base your number is on.
Should I disclose the subcontractor’s cost?
That is a business decision. Many agencies quote a single all-in price rather than the sub’s cost plus a visible markup, since the client is buying a managed outcome, not raw hours.
Related calculators
Educational estimate, not financial advice.