Markup is profit as a share of your cost. Margin is profit as a share of your price. Because the price is bigger than the cost, the same dollars of profit are a smaller margin than markup. Contractors who add “25% on top” and call it a 25% margin leave money on every job.
Example: a job costs $2,750 all-in. To keep a 20% margin the price is $2,750 ÷ 0.80 = $3,437.50. Charging $2,750 × 1.20 = $3,300 keeps only a 16.7% margin.
| Markup | Margin | Margin | Markup needed |
|---|---|---|---|
| 10% | 9.1% | 10% | 11.1% |
| 20% | 16.7% | 20% | 25% |
| 25% | 20% | 25% | 33.3% |
| 33.3% | 25% | 30% | 42.9% |
| 50% | 33.3% | 40% | 66.7% |
| 100% | 50% | 50% | 100% |
Then find your walk-away price — full cost including overhead, below which the job loses money — in the Trade Bid Studio, or pick a trade-specific bid calculator that works out hours and quantities too.
Margin = markup / (1 + markup). A 25% markup is 0.25 / 1.25 = 20% margin.
Markup = margin / (1 - margin). A 30% margin needs a 0.30 / 0.70 = 42.9% markup.