Pay Rate Markup Calculator

Calculate Bill Rates and Gross Margins for Staffing & Contracting

Employee Pay Rate ($/hr)

Markup Percentage (%)

Final Bill Rate $0.00

Gross Margin % 0.00%

Gross Profit / Hr $0.00

Markup Amount $0.00

How to Use the Pay Rate Markup Calculator

In the recruitment, staffing, and consulting industries, understanding the relationship between what you pay an employee and what you bill the client is critical for profitability. This calculator helps you instantly determine your bill rate based on a desired markup percentage.

The Pay Rate Markup Formula

The math behind staffing markups is straightforward, but it is often confused with gross margin. The formulas used in this calculator are:

Bill Rate: Pay Rate × (1 + (Markup % / 100))
Gross Profit: Bill Rate – Pay Rate
Gross Margin %: (Gross Profit / Bill Rate) × 100

Markup vs. Margin: What's the Difference?

While often used interchangeably, they represent different financial metrics:

Markup is the percentage added to the cost (the pay rate). If you pay $50/hr and add a 50% markup, you bill $75/hr.

Gross Margin is the percentage of the bill rate that is profit. In the example above, your profit is $25. Your margin is $25 divided by $75, which is 33.3%.

Real-World Example: IT Staffing

Imagine you are a technical recruiter hiring a Software Engineer. The candidate requests a pay rate of $60.00 per hour. To cover your overhead (taxes, insurance, office costs) and generate profit, your agency requires a 45% markup.

Pay Rate: $60.00
Markup: 45% ($27.00)
Calculated Bill Rate: $87.00
Resulting Gross Margin: 31.03%

By using this tool, you can ensure that your bill rate is high enough to cover statutory costs like FICA, FUTA, SUTA, and Workers' Comp, which typically consume the first 15-20% of your markup.

function calculateMarkup() { var pay = parseFloat(document.getElementById('payRate').value); var markup = parseFloat(document.getElementById('markupPercent').value); var resultDiv = document.getElementById('markupResults'); if (isNaN(pay) || isNaN(markup) || pay <= 0) { alert("Please enter valid numbers for Pay Rate and Markup Percentage."); return; } // Calculations var markupMultiplier = markup / 100; var billRate = pay * (1 + markupMultiplier); var profit = billRate – pay; var marginPercent = (profit / billRate) * 100; var markupAmount = billRate – pay; // Display Results document.getElementById('resBillRate').innerText = "$" + billRate.toFixed(2); document.getElementById('resMarginPercent').innerText = marginPercent.toFixed(2) + "%"; document.getElementById('resProfit').innerText = "$" + profit.toFixed(2); document.getElementById('resMarkupAmt').innerText = "$" + markupAmount.toFixed(2); resultDiv.style.display = 'block'; }