In SynkedUP, pricing is built in two layers:
Markup is used to recover overhead
Profit margin is added on top
Understanding how these two work — and why they produce different numbers — is key to making sure your estimates are accurate and profitable.
Step 1: Markup — Recovering Your Overhead
What is Overhead?
Overhead includes costs required to run your business that aren't tied to one specific job:
Office staff
Rent or mortgage
Insurance
Software subscriptions
Vehicles and fuel
Marketing
Utilities
These expenses must be covered by every job you sell.
How Markup Works
Markup is a percentage added on top of your direct costs. It's calculated from cost.
Example: if a material costs $5.00 and your overhead markup is 20%:
$5.00 × 20% = $1.00
Break-even price = $6.00
At this point you've recovered overhead but have no profit yet.
Step 2: Profit Margin — Adding True Profit
How Profit Margin Works
Profit margin is the percentage of the final selling price that is profit — not the percentage added to cost. This is an important distinction.
Because margin is calculated from the selling price (not the cost), the math works differently than a simple add-on.
Worked Example
Using the same $5.00 item with a $6.00 break-even, let's say you want an 18% profit margin:
Selling price = Break-even ÷ (1 − 0.18)
Selling price = $6.00 ÷ 0.82 = $7.32
Why $7.32 and not $7.08? Because $7.08 would only be 18% added on top of $6.00 (markup math), which would give you less than 18% of the final price as profit.
Let's verify: $7.32 − $6.00 = $1.32 profit. $1.32 ÷ $7.32 = 18% ✓
If you had simply added 18% to $6.00 to get $7.08, your actual margin would be $1.08 ÷ $7.08 = 15.25% — not the 18% you wanted.
Full Breakdown on that $5.00 Item
$5.00 = direct cost
$1.00 = overhead recovery (20% markup)
$1.32 = profit (18% margin)
$7.32 = final selling price
Why Markup and Margin Are Not the Same
Markup is based on cost — you add a percentage to what you paid
Margin is based on selling price — the profit is a percentage of what you charge
Because they're calculated differently, the same percentage produces different results:
A 20% profit margin requires a 25% markup
A 25% profit margin requires a 33.3% markup
Markup | Profit Margin |
Based on cost | Based on selling price |
Used to recover overhead | Used to generate net profit |
Added to cost | Calculated from final price (top-down) |
Unbillable vs. $0 — What's the Difference?
SynkedUP gives you two ways to price something at no charge to the customer, and they behave differently:
$0 price: The item appears on the proposal/invoice with a $0 line item. The customer can see it.
Unbillable: The item is excluded from the customer-facing price entirely. It still shows in your job costing internally but does not appear on the proposal or invoice.
Use Unbillable when you want to track a cost internally (for job costing purposes) without showing it to the customer. Use $0 when you want the customer to see the line item but know there's no charge for it.
How SynkedUP Uses Both Together
SynkedUP separates pricing into two clear steps:
Markup covers your overhead
Profit margin creates net profit
This ensures your business expenses are covered first, your desired profit is calculated accurately, and your estimates stay consistent across every job.
Questions about your pricing setup? Reach out in the chat — we're happy to walk through it with you.