Markup vs margin
Updated 2026-07-17 · figures as of July 2026
Markup is what you add on top of cost. Margin is what remains of the price as profit. They are related but not equal: a 25% markup on cost produces a 20% margin on price. Contractors who quote a markup thinking it is their margin are giving away the difference on every job.
The math: price = cost x (1 + markup). Margin = (price - cost) / price. So +25% markup on a $100,000 bare cost gives a $125,000 price, and the $25,000 of profit is 20% of the price, not 25%.
Why does the markup vs margin confusion cost money?
Because targets get set in margin terms (what the business needs to keep) but applied in markup terms (what gets typed into the bid). A contractor who needs a 25% margin must mark up by 33%, not 25%. Applying the wrong one on a $300,000 job leaves five figures on the table.
What markup do the three tiers represent?
In a three-tier estimate, Bare is cost with zero markup, the +25% rung is a typical correct-bid markup (a 20% margin), and +50% is a strong-margin price (a 33% margin). Seeing all three keeps the choice explicit.
Price your next Tampa Bay job from the same grounded cost data these figures come from, with your margin visible at three tiers before you bid.
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