In practice
Markup is calculated on cost: (bill rate − cost) ÷ cost. It is different from margin, which is calculated on the bill rate.
The same deal expressed as markup looks larger than when expressed as margin, so state which one you mean.
How it shows up
At a bill rate of $85 and a cost of $65, the markup is $20 ÷ $65, or 30.77%, while the margin is $20 ÷ $85, or 23.53%.
How a staffing team uses it
Quote consistently in your team and with clients. Convert with margin = markup ÷ (1 + markup).
Common mistakes
- Using markup and margin interchangeably.
- Calculating markup on the bill rate.
- Forgetting employer costs on W2 deals.
Frequently asked questions
How do I convert markup to margin?
Divide the markup by one plus the markup. A 30% markup is 0.30 ÷ 1.30, about 23.1% margin.