Markup
Markup is the amount added to cost to arrive at the selling price.
Markup is calculated on cost: a 25% markup on a $100 cost gives a $125 price. It is the most common way contractors and resellers price materials and subcontracted work. Markup differs from margin, which is calculated on the selling price — confusing the two is a classic pricing error.
Example
A contractor buys materials for $800 and applies a 20% markup, billing the client $960.
Related terms
Frequently asked questions
What is the difference between markup and margin?
Markup is profit as a percentage of cost; margin is profit as a percentage of selling price. A 25% markup on $100 cost ($125 price) equals a 20% margin — same dollars, different base.
Should I disclose my markup to the client?
If the contract is cost-plus or requires open-book pricing, yes. Otherwise it is your commercial decision — but the total price must still be agreed and fair.
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