Markup is not margin, and the difference is your whole year

A 15% markup is not a 15% margin. Markup is what you add on top of cost. Margin is what you keep as a share of the selling price. Confuse them and you will feel busy and wonder where the money went.

Markup vs margin: the definitions

• Cost — labor, material, burden, and other direct costs you assign to the job.
• Markup — the percent (or stack of percents) you add to cost to get price.
• Margin — (Price − Cost) ÷ Price.

Accountants speak margin. Estimators often speak markup. Your proposal process has to translate—or your P&L will surprise you.

The quick check (do this once)

Cost $100. Add 15% markup. Sell price $115. Margin = 15 ÷ 115 ≈ 13%, not 15%.

Want about 15% margin? You need roughly 17.6% markup on cost (margin ÷ (1 − margin)). Do the arithmetic slowly once, then bake it into defaults.

On $2M of work, a two-point gap is a truck—tools, a vehicle, or the raise you thought you could give.

Why the gap eats a truck over a year

Soft markup + Word formatting under deadline + verbal extras = unpaid work that still looks “won.” Volume hides the leak until cash gets tight.

Set defaults—do not rebuild in Excel every bid

Labor rates, material markups, overhead, and profit should be defaults you apply to every line—not reinvented at 11 p.m. See contribution before you send. A pretty proposal with soft margin is still unpaid work.

This is also why Quick Quote and deeper estimates should share the same rate logic: speed without a second set of books.

What to show the client vs what you track internally

Clients need clear scope, pricing they can follow, and exclusions. They do not always need your internal markup math on the face of the PDF. You need the math before the PDF exists—so the number you send is one you can defend.

See overhead and fee presented cleanly on a commercial proposal: Sample commercial construction proposal. Related: What contingency is actually for.