The amount added to the cost of goods or services to determine the selling price, covering overhead and profit.
Markup is what you add on top of your costs to set your price. If materials cost $100 and you charge $150, your markup is $50 (or 50%). Markup covers your overhead expenses, time, expertise, and profit. Without adequate markup, you'd just be breaking even—or worse, losing money on every job.
For contractors and service providers, understanding markup is essential for pricing jobs profitably.
Markup is expressed as a percentage of cost:
To apply markup: Selling Price = Cost × (1 + Markup %)
At 50% markup: $100 × 1.50 = $150
Markup is calculated on cost. Profit margin is calculated on selling price. A 50% markup does not equal 50% profit margin. In the example above: $50 profit ÷ $150 price = 33% margin. Both are useful—just don't confuse them when pricing or analyzing profitability.
