MARKUP VS MARGIN

What’s the difference between markup and margin?

Short answer: markup compares profit dollars with cost; margin compares profit dollars with selling price. The percentages are not interchangeable.

A simple example

If something costs $100 and you add a 50% markup, the selling price is $150.

Markup = ($150 − $100) ÷ $100 = 50%

But the gross margin on that $150 sale is about 33.3%.

Margin = ($150 − $100) ÷ $150 ≈ 33.3%

Why this causes pricing mistakes

An owner may say “I need a 40% margin” and then simply add 40% to cost. That produces a lower margin than intended because markup and margin use different denominators.

Jobs need more than a material markup

Even a correct markup on materials does not automatically make the whole job profitable. Labor capacity, overhead, nonbillable time and the total job contribution still matter.

Use your own numbers

JJL Business Tools turns these ideas into practical targets using your actual costs, time and income goals.

See the full Markup vs Margin Guide