In SynkedUP, pricing is built in two layers:
Markup is used to recover overhead
Profit margin is added on top
Understanding how these two percentages work — and how they differ — is critical to making sure your estimates are accurate and profitable.
Step 1: Markup — Recovering Your Overhead
In SynkedUP, markup is applied to your direct job costs to recover overhead expenses.
What is Overhead?
Overhead includes the costs required to run your business that are not directly tied to one specific job, such as:
Office staff
Rent or mortgage
Insurance
Software subscriptions
Vehicles and fuel
Marketing
Utilities
These expenses must be covered by every job you sell.
What is Markup?
Markup is a percentage added to your direct costs.
It is calculated based on cost.
Markup Formula
Markup%=SellingPrice−CostCostMarkup \% = \frac{Selling Price - Cost}{Cost}Markup%=CostSellingPrice−Cost
Example
If your job costs are $10,000 and you apply a 20% markup:
$10,000 × 20% = $2,000
New total = $12,000
That $2,000 is intended to recover your overhead.
At this stage:
$10,000 = direct costs
$2,000 = overhead recovery
Total = $12,000
No profit has been added yet.
Step 2: Profit Margin — Adding True Profit
After overhead is recovered, SynkedUP allows you to apply a profit margin.
What is Profit Margin?
Profit margin is the percentage of the final selling price that is profit.
It is calculated based on the final price — not the cost.
Profit Margin Formula
Margin%=SellingPrice−TotalCostSellingPriceMargin \% = \frac{Selling Price - Total Cost}{Selling Price}Margin%=SellingPriceSellingPrice−TotalCost
Unlike markup, margin is calculated from the top down.
Why Markup and Margin Are Not the Same
This is where many contractors get confused.
Markup is based on cost.
Margin is based on selling price.
Because they are calculated differently, the percentages are not interchangeable.
Example
If your total (after overhead markup) is $12,000 and you want a 20% profit margin:
You do NOT add 20% to $12,000.
Instead:
SellingPrice=12,0001−.20Selling Price = \frac{12,000}{1 - .20}SellingPrice=1−.2012,000SellingPrice=15,000Selling Price = 15,000SellingPrice=15,000
Now:
$10,000 = direct costs
$2,000 = overhead recovery
$3,000 = profit
$15,000 = final price
Your profit is truly 20% of the final price.
Quick Comparison: Markup vs. Margin
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 |
Lower percentage | Requires higher markup to achieve |
Important Note
A 20% profit margin requires a 25% markup.
A 25% profit margin requires a 33.33% markup.
They are not the same percentage.
How SynkedUP Uses Both Together
SynkedUP separates pricing into two clear steps:
Markup covers your overhead
Profit margin creates net profit
This structure ensures:
Your business expenses are covered first
Your desired profit is calculated accurately
You avoid underpricing jobs
Your estimates stay consistent and scalable
By understanding how markup and margin work together, you can confidently set pricing that sustains and grows your business.