Markup vs Margin for Contractors

Markup and margin both describe profit, but they're calculated differently — and mixing them up can leave real money on the table.

The core difference

Markup is profit as a percentage of cost. Margin is profit as a percentage of selling price. Because selling price is always higher than cost, margin is always a smaller number than markup for the same job.

Why it matters

If you're aiming for a 30% profit margin but you accidentally apply a 30% markup instead, you'll actually end up with about a 23% margin — a meaningful shortfall across a year of jobs.

A quick way to convert

Margin % = Markup % ÷ (100 + Markup %) × 100. Our markup calculator converts between the two instantly and includes a full comparison table.