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Subcontractor markup calculator

Work out what to bill a client for subcontracted work, and see the margin it really leaves. Enter what the subcontractor costs you and the markup you want to add, plus any of your own hours on top, and the calculator keeps markup and margin straight so a healthy-looking percentage is actually healthy.

§ 01 Your numbers

Change anything. The answer updates as you type.

What the sub charges YOU for the work. Your cost of goods for this job.
What you add on top of the sub's cost. This is markup, not margin: a 30% markup is a smaller share of the final price than 30% sounds.
Time you spend scoping, managing, and reviewing the sub's work. Real work that is easy to give away for free.
What your own time is worth. Your management hours are billed at this on top of the marked-up sub cost.
Estimated cost
$2,940

Typical range $2,793 – $3,234

  • Subcontractor cost (pass-through)$2,000
  • Your markup on the sub$600
  • Your management time$340
  • Total$2,940
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Under about $3,000 client price is a small pass-through job. Bill your own time so the markup is not carrying the whole job.

What this assumes, and where it could be wrong

Every one of these is a place the number could be off. They are here because you should be able to check our working, not because we are hedging.

MARKUP AND MARGIN ARE DIFFERENT NUMBERS, AND THE PAGE KEEPS THEM APART.
Markup is a percentage ADDED to your cost; margin is profit as a share of the final PRICE. A 30% markup on a $2,000 sub adds $600, but that $600 is about 23% of the $2,600 price, so the margin is 23%, not 30%. Confusing the two makes a job look more profitable than it is, and it is the single most common pricing mistake in subcontracted work

The subcontractor cost is a pass-through, not your profit. It leaves your account the moment the sub invoices you, so your real profit is the markup plus whatever you bill for your own time, and the margin is measured against the full client price.

Your own hours are the line people give away. Scoping the job, briefing the sub, reviewing the work, and handling the client are real work. If you do not bill them, the markup alone has to cover them, and a slim markup often does not.

The markup has to cover more than profit. It absorbs the risk that the sub is late or the work needs redoing, the cost of finding the client, and the time you spend that is not in the management line. A markup sized only for the jobs that go smoothly loses money on the ones that run long.

The defaults are ours and are a starting point. What a client will actually pay is set by the market and the value, not by your cost plus a fixed percentage, so treat the output as a floor to clear, not a price to stop at.

Frequently asked questions

What is the difference between markup and margin?
Markup is the percentage you add to your cost; margin is profit as a percentage of the selling price. They are never equal. A 30% markup on a $2,000 cost gives a $2,600 price, and the $600 profit is about 23% of that price, so it is a 23% margin. The calculator shows both so you do not mistake one for the other.
How much should I mark up a subcontractor?
Enough to cover your profit, your risk, and the time you spend managing the job that is not billed separately. Agencies commonly mark up subcontracted work by a quarter to a half, but the right number depends on how much of your own work the job takes and what the client will bear. The calculator shows the margin any markup actually leaves.
Should I bill my own hours on top of the markup?
Yes, if the job takes real management time. Scoping, briefing, reviewing, and client-handling are work. Rolling them into the markup only works if the markup is large enough to cover them and still leave profit; billing them as a line makes the true cost of the job visible and keeps the margin honest.
Is it ethical to mark up a subcontractor?
Yes. You are carrying the client relationship, the risk if the work is wrong, and the management overhead, and the markup pays for those. What matters is that you deliver the value you are charging for. Clients pay for the outcome and the accountability, not for a line-item view of what you paid the sub.

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