Markup and margin are not the same number.

Here it is in one breath. Markup is how much you add on top of what the job cost you. Margin is how much of the price you charge is profit. Same dollars, measured against two different numbers, so the percentages are never the same.

Say a job costs you $8,000 and you charge $10,000. Your profit is $2,000 either way. As markup, that $2,000 is 25% of your $8,000 cost. As margin, that same $2,000 is 20% of your $10,000 price. Nothing changed except what you divided by. Markup always looks like the bigger, friendlier number, which is exactly why it fools people.

Twenty percent markup is not twenty percent margin. On a $10,000 job that thinking costs you real money. Here is the worked version so it lands.

You need a 25% margin to keep the lights on. You quote a 25% markup because in your head they are the same. On a job that costs you $10,000, a 25% markup means you charge $12,500 and pocket $2,500. But a true 25% margin needed you to charge $13,333 and pocket $3,333. You just left $833 on the table, and you will do it again on the next job, and the one after that. Ten jobs a year and that is $8,000 you quoted away without noticing.

This is not a rounding quibble. It is a systematic leak. Every quote built on the wrong base comes in light, and because the work still gets done and the invoice still gets paid, nothing ever screams at you. The money just is not there at the end of the year.

Most trades quote by adding a markup, because that is how a quote is built: take your costs, add your bit on top. Nothing wrong with that. The trouble starts when you set your target as a margin, which is the honest way to think about whether a business survives, but then quote a markup number that does not reach it.

The fix is one habit. Decide the margin you need, then convert it to the markup that delivers it, and quote that markup. To hit a 20% margin you add a 25% markup. To hit a 30% margin you add roughly a 43% markup. To hit a 40% margin you add a 67% markup. The gap between the two numbers grows fast as your target climbs, which is precisely when getting it wrong hurts most.

If your quotes are landing but the work still is not coming in, the leak might not be your pricing at all. We wrote a plain read on why a site gets traffic but no enquiries if that sounds like your situation.

Stick this somewhere you can see it when you are pricing. Read it left to right: the markup you add, and the margin it actually gives you.

• 10% markup is a 9.1% margin
• 20% markup is a 16.7% margin
• 30% markup is a 23.1% margin
• 50% markup is a 33.3% margin
• 100% markup is a 50% margin

Notice that you have to double your cost, a 100% markup, just to reach a 50% margin. If someone tells you they run on 50% and they mean markup, they are running on a third of the price as profit, not half. Words matter here. When a supplier, a mate, or a quoting app throws a percentage at you, ask which one they mean before you copy it.

There is no single right margin, and anyone who gives you one without knowing your overheads is guessing. What is true is the shape of it. Your margin has to cover everything that is not on the job: the ute, the insurance, the tools, the quiet weeks, the hours you spend quoting for free, and a wage for you that is more than survival. Gross margin on the job is not profit in your pocket. It is the pool that all of that comes out of.

So work backwards. Add up what the business needs to cover in a year, add the wage you actually want, and that tells you the margin you need across your jobs. Then use the calculator to turn that margin into the markup you quote. The tool will not tell you your number. It will make sure the number you pick is the number you get.