Markup is not margin, and the difference is costing you more than you think
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A job that costs $100 with a 25% markup sells for $125, but the margin is only 20%. If you want a true 25% margin, the required markup is closer to 33%.
That gap may look small on one job, but across hundreds of quotes it can materially reduce profit.
Why it matters
Most owners know their markup, but fewer know their true margin. The problem is that quoting happens repeatedly across the year, often through templates and systems that may have been built around the wrong percentage.
If a business prices using markup but measures performance using margin, every quote can carry a small shortfall from the beginning. Multiply that across a full year of work and the result can be a business that looks busy but delivers less profit than expected.
The margin did not disappear during delivery. It was missing from the price before the job started.
What good looks like
The solution is to price deliberately to the margin the business wants to retain:
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Start with the target margin and work backwards to the required sale price.
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Check that quoting templates calculate margin correctly rather than simply applying markup.
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Make sure everyone preparing quotes understands the difference between the two.
At a 50% markup, for example, the actual margin is only about 33%. The larger the percentage, the wider the gap becomes.
None of this requires new software or a major process change. It simply requires managing the right number.
The price is what you charge. The margin is what survives. Confusing the two is one of the most common reasons a busy business is not necessarily a profitable one.
