Markup vs Margin
Type either one. The other updates. Add your cost to see what the job actually leaves you.
- You keep
- —
- Markup
- —
- Margin
- —
Why the two are not the same
Markup measures profit against what the job cost you. Margin measures it against what you charged. Same dollars, different denominator, and the gap widens the higher you go.
Add 50% to a $1,000 cost and you charge $1,500. You kept $500 — which is 50% of the cost but only 33% of the price. Aim for a 50% margin and you would have to charge $2,000. That is a $500 difference on one job, and it is the single most common pricing mistake in the trades.
Rule of thumb: the margin is always the smaller number. If someone quotes you a "50% profit" and won't say which one they mean, assume markup and assume it's thinner than it sounds.
Worked example
A service job costs you $1,000 — $600 labor, $400 parts.
| You want | You charge | You keep |
|---|---|---|
| 50% markup | $1,500.00 | $500.00 (33.3% margin) |
| 50% margin | $2,000.00 | $1,000.00 (100% markup) |
Common questions
- Which one should I actually price on?
- Margin. It is the number that ties to your profit and loss statement, and it is the one your accountant, your lender and any future buyer will ask about. Markup is a shop-floor shortcut for getting to a price quickly.
- What margin should a trade business run at?
- Gross margins of 40–50% on service work and 25–35% on installs are common targets, but the only number that matters is whether it covers your overhead and leaves net profit. Work that out on the true hourly rate calculator rather than copying a benchmark.
- Why can't I have a 100% margin?
- A 100% margin means the job cost you nothing. The math divides by zero, so the calculator stops instead of showing an impossible price.
- Does this include overhead?
- Only if you put overhead into the cost box. Most contractors enter just labor and materials, which means the margin shown here is gross margin, not net. The job quote builder adds overhead properly.