Markup vs margin
Both are percentages, which is why they get confused. BEQ treats them differently, and the difference is visible in the total.
Markup
20% markup adds 20% of the cost to the cost. On a cost of AED 9,900 that is AED 1,980, giving a selling price of AED 11,880.
Margin
20% margin makes profit 20% of the selling price. BEQ divides the cost by (1 − 20%), which gives AED 12,375 and a profit of AED 2,475 on the same job.
A worked example
The figures below are illustrative, but the sequence is exactly the order BEQ calculates in. Amounts are in AED.
| Line | Amount (AED) |
|---|---|
| Direct cost | 9,900.00 |
| Profit, 20% markup | 1,980.00 |
| Selling price (markup) | 11,880.00 |
| Profit, 20% margin | 2,475.00 |
| Selling price (margin) | 12,375.00 |
A fixed profit amount is available too, for work where the market sets the price and the margin is whatever is left. Whichever method you choose, the calculation behind the saved quotation and the PDF is the same calculation you reviewed on screen.
Try it
Enter a cost and a percentage, then toggle between markup and margin.
Profit
1980.00 AED
Selling price
11880.00 AED
Markup adds the percentage to the cost. Margin makes the profit that percentage of the selling price.
The formulas
Markup and margin are both percentages, but they are applied to different bases. Mixing them up is the most common pricing mistake in construction and services work.
| Method | Formula | On a cost of AED 9,900 |
|---|---|---|
| 20% markup | cost × 1.20 | AED 11,880 |
| 20% margin | cost ÷ (1 − 0.20) | AED 12,375 |
With markup, the percentage is added on top of the cost. With margin, the percentage is taken out of the selling price, so the same percentage produces a higher selling price.
When to use which
- Markup suits work where you know your cost and want a simple, predictable add-on: labor by the day, materials at a fixed percentage.
- Margin suits work where the market sets the selling price and you need a target share of it: competitive tenders, quoted packages.
- A fixed profit amount suits work where the price is set by the market and the margin is whatever is left.
Common mistakes
- Treating 20% markup and 20% margin as the same number. They are not: on the same cost they produce different selling prices.
- Adding a percentage to the cost and calling it a margin. That is a markup.
- Rounding the unit rate instead of the total, which drifts the final price.
- Burying overhead inside a rounded-up unit rate instead of showing it separately.
Where BEQ fits
BEQ keeps your material, labor, overhead and profit build-up private by default, and shows the client the line descriptions and totals. You choose whether to show unit rates and line totals on the quotation.
See the construction quotation walkthrough for a full worked estimate, or what BEQ costs. To price your own work, you can create a free account.