Markup is added to cost
If a job costs $1,000 and you apply a 25% markup, the selling price is $1,250. The $250 gross profit is 20% of the $1,250 selling price.
Margin is measured from selling price
If you want a 25% gross margin on a $1,000 cost, divide cost by 1 minus the target margin: $1,000 ÷ 0.75 = $1,333.33.
Why contractors should know both
Markup is convenient when building a price from costs. Margin is useful for understanding how much of sales remains after direct job cost. Track both consistently so jobs can be compared.