Difference between Markup and Margin

There is a common confusion when it comes to calculating ‘Markup’ and ‘Margin’. (May also be referred to as Builder’s Margin, or Profit Margin)

Some people seem to assume that they both mean the same thing.

However, there is a big difference between calculating the two. Failure to understand the difference can sometimes cause conflicts to arise between the builder and client. As such, it is important to be able to distinguish between the two.

Example:

Let’s say for instance something was to cost $80.

A 20% Markup for $80 would be:
$80 + $16 (which is 20% of $80)
= $96

IF a 20% Margin was to be applied on the other hand:
$80 + $20 (which is the 20% margin)
= $100 (as 20% of $100 is $20 and not $16)

As you can see from the example above, there is a final 4% difference between the two methods.

As long as the percentage chosen for Markup and Margin remains the same amount (in this case 20%), the Markup method will always result in a lower number.

So when you go into the next meeting or contract signing, be more attentive as to which proposed method has been stated. In construction, most contracts (such as the ABIC Contracts, HIA contracts or MBA’s contracts) will mention Margin as opposed to Markup so it is important to know how these calculations are done.

Click here for an online calculator which enables you to find out the final figure without worrying about the Math.

(Image sourced from Accountancy Learning)

27 Comments. Leave new

  • Hi there! Such a wonderful short article, thank you!

    Reply
  • Such a special point of view– It actually makes me question how I
    thought of it in the past.

    Reply
  • I wanted to post you the little remark so as to give many thanks as before about the stunning tricks you’ve provided in this article. This has been certainly shockingly generous with people like you to make without restraint all that a number of us would have made available as an e book in making some cash for themselves, certainly considering that you could possibly have done it if you desired. These basics in addition acted as a great way to be sure that some people have similar dream just like my own to know the truth great deal more pertaining to this problem. I am sure there are a lot more pleasurable instances up front for people who check out your blog.

    Reply
  • Well I truly liked reading it. This article procured by you is very useful for proper planning.

    Reply
  • Really great information, thanks for the share and insights! I will recommend this to my friends for sure.

    Reply
  • Great info, thanks for the share!

    Reply
  • I got what you mean,bookmarked, very decent web site.

    Reply
  • I got what you intend,saved to my bookmarks, very decent internet site.

    Reply
  • I don’t commonly comment but I gotta state thanks for the post on this perfect one :D.

    Reply
  • If some one wishes expert view about running a blog then i propose him/her to pay a quick
    visit this web site, Keep up the fastidious
    work.

    Reply
  • I really like what you guys are up too. This type of clever work
    and reporting! Keep up the awesome works guys I’ve included you guys to my blogroll.

    Reply
  • I was just looking for this info for a while. After six hours of continuous Googleing, finally I got
    it in your site. I wonder what’s the lack of Google strategy
    that don’t rank this kind of informative web sites in top of the list.
    Generally the top sites are full of garbage.

    Reply
  • Hey There. I found your blog using msn. This is an extremely well written article.
    I will be sure to bookmark it and return to read more of your useful information. Thanks for the post.
    I will certainly return.

    Reply
  • Thanks for finally writing about >Markup vs Margin | Magico Constructions <Liked it!

    Reply
  • Hello! Someone in my Facebook group shared this site with us
    so I came to take a look. I’m definitely loving the information. I’m book-marking and will be tweeting this
    to my followers! Outstanding blog and great design and style.

    Reply
  • I really like what you guys are up too. This type of clever work and reporting!
    Keep up the great works guys I’ve you guys to my own blogroll.

    Reply
  • I was curious if you ever thought of changing the layout of
    your site? Its very well written; I love what youve got
    to say. But maybe you could a little more in the way of content so people could connect with
    it better. Youve got an awful lot of text for only having one or two pictures.
    Maybe you could space it out better?

    Reply
  • Yay google is my queen helped me to find this outstanding web site!

    Reply
  • Keep up the excellent piece of work, I read few posts on this website and
    I conceive that your web blog is rattling interesting and contains sets
    of fantastic info.

    Reply
  • Wow, amazing blog layout! How long have you been blogging for? you made blogging look easy. The overall look of your web site is great, as well as the content!

    Reply
  • I was just searching for this information for some time. After 6 hours of
    continuous Googleing, finally I got it in your site.
    I wonder what is the lack of Google strategy that don’t rank this kind of informative web sites in top of
    the list. Usually the top web sites are full of garbage.

    Reply
  • Way cool! Some very valid points! I appreciate you writing this post and the rest of
    the site is very good.

    Reply
  • Good day very cool web site!! Guy .. Beautiful ..
    Amazing .. I will bookmark your web site and take the feeds additionally?
    I am glad to find so many useful information right here in the submit, we’d like work out extra techniques in this regard, thanks for sharing.

    . . . . .

    Reply
  • You are my inspiration, I possess few web logs and rarely run out from post :).

    Reply
  • As I web-site possessor I believe the content matter here is rattling great , appreciate it for your hard work.

    You should keep it up forever! Best of luck.

    Reply
  • It’s really a nice and helpful piece of info. I’m satisfied that you simply shared this useful information with us. Please keep us up to date like this. Thanks for sharing.

    Reply
  • Hi! Do you use Twitter? I’d like to follow you if
    that would be okay. I’m definitely enjoying your blog and look forward to new posts.

    Reply

Leave a Reply

Your email address will not be published. Required fields are marked *

Fill out this field
Fill out this field
Please enter a valid email address.