Markup and margin aren't the same number.

The denominator makes the difference.

Markup measures the amount added relative to your selected cost basis. Margin measures that same difference relative to the selling price. They describe the same dollars from two different perspectives.

Because the selling price is larger than a positive cost basis when markup is positive, the margin percentage will be lower than the markup percentage.

20% markup produces 16.67% margin.

Take an illustrative cost basis of $1,000. A 20% markup adds $200, making the selling price $1,200. That $200 is 20% of the cost basis, but only 16.67% of the selling price.

To calculate a price for a selected margin, divide the cost basis by one minus the margin expressed as a decimal. A 20% margin gives $1,000 ÷ 0.80 = $1,250. This is a 25% markup on the same $1,000 cost basis.

Define which costs you're comparing.

A calculation can be numerically correct and still be misunderstood if the cost basis is unclear. State whether the number includes material, labor, equipment, overhead, contingency or other items before comparing percentages.

For example, adding a markup after overhead and contingency produces a different price than applying it only to direct materials. Tax, discounts and later changes may also affect the final commercial picture. Keep the assumptions explicit and use the same basis when comparing alternatives.

The difference over your chosen cost basis is not automatically net profit. Your business may have other expenses or obligations. These examples explain the arithmetic; they do not recommend a markup or margin for a particular trade or project.

Keep the pricing decisions visible.

Bidwright's estimate builder separates reviewed inputs from commercial adjustments and preserves revisions. Use your own verified rates and company policies, then review the calculation sequence before preparing a proposal.

Explore the construction estimate builder or use the pre-bid checklist to review the rest of the estimate.