No need to know the vocabulary first
A few words, explained
- Overhead
- Everyday business costs, such as rent, that need to be covered by the work you sell.
- Markup
- The amount added to a cost, expressed as a percentage of that cost.
- Margin
- The amount left after the included costs, expressed as a percentage of the selling price.
- Scope
- What an agreed job includes, and what it leaves out.
Build the true cost base first
Before adding profit, account for material, labor, overhead, consumables, delivery, installation, subcontractors, and a realistic waste allowance. Pricing math cannot fix a missing cost.
Apply one pricing rule consistently
Markup is added to cost; margin is profit measured as a percentage of the selling price. Choose the language and calculation your shop uses, then keep it consistent across all estimates.
Review the job after completion
Compare estimated costs and hours with the completed job. Use the differences to update material allowances, labor estimates or the scope of similar work.
Shop 101
Apply this reference to your project
Use your own project measurements and record how the result affects the material, setup or estimate.
- Name the material, dimension, or cost input that affects the decision.
- Use the reference and related calculator to check the measurement or estimate.
- Test or compare the result before committing final material, time, or client scope.
Try it with your own numbers
Common questions
Is markup the same as profit margin?
No. Markup is based on cost, while margin is based on selling price. The percentages are not interchangeable.
Should labor have markup?
Your complete cost base should recover the cost of operating the business and produce the target profit. Treat labor, overhead, and material deliberately rather than hiding some costs in another line.
Why does my quote look profitable but the job is not?
Common reasons include omitted labor, delivery, installation, waste, overhead, payment fees, or revisions. Track actuals and update the estimating assumptions.