Markup vs margin

Markup is the percentage you add on top of your cost. Margin is the percentage of the sell price that's profit. A 25% markup means sell price = cost × 1.25; that's a 20% margin (because 20% of the sell price is profit). They're the same dollar amount expressed against a different denominator: markup divides by cost; margin divides by sell.

Most tradies think in markup ("I add 20% to materials") but bench-mark against margin reports (industry margins of X%). Confusing the two means you set a markup that's lower than your target margin without realising. Example: if you want a 25% margin you need a 33% markup — a 25% markup leaves you at only 20% margin.

AU residential trades commonly run 20–40% markup on materials, depending on whether you handle returns / warranty / delivery (which justifies higher markup) or just pass through the supplier price (lower). For projects with high materials risk (custom-order tiles, imported fittings) 40–50% isn't unreasonable. For commodity items in a competitive market, 15–20% is typical.

Healthy AU sole-trader trade businesses typically run 30–45% gross margin on labour-heavy jobs and 15–25% on materials-only line items. The blended margin (across the whole quote) ends up 20–35%. Anything under 15% and you're an employee with extra paperwork; anything over 50% and you're either over-pricing or under-costing your overheads.

No. Markup is the gross add-on to a cost. Profit is what's left after you subtract every cost (materials, labour, overhead, tax). A 25% markup on materials doesn't mean 25% net profit — it means 25% of the materials cost gets added to the sell price; you still have to pay yourself, your overheads, and the tax man out of the resulting margin.