How to Price Profitably: Margin vs. Markup

Pricing is everything with a contracting business. It’s what keeps your team paid, your equipment running, and your business growing.

But let’s be honest. Setting profitable pricing isn’t always as easy as it could be. Words like “margin” and “markup” might sound interchangeable, but confusing the two could mean the difference between thriving and just getting by.

That’s where AK DASH comes in. With our Job Cost Calculators and our new product pricing feature for Scopes of Work, we’re making it easier than ever to price your jobs accurately and profitably. You’ll not only gain clarity on your costs but also set yourself up to win the right jobs at the right price. It’s a win-win for your business and your clients.

Not clear on the difference between margin and markup and how those two similar-sounding terms can affect your company? Let’s take a closer look.

Margin vs. Markup: What’s the Difference?

Let’s start with the basics. If you’re like most contractors, you’ve probably heard the terms “margin” and “markup” tossed around. You might even use them interchangeably. But here’s the deal: they’re not the same, and knowing the difference is the key to pricing your work correctly.

Markup: Merriam-Webster defines markup as, “an amount added to the cost price to determine the selling price”. In other words, this is the percentage you add to your costs to determine what your customers pay. It’s a way of covering your expenses while ensuring a profit.

Example: If a job costs you $500 and you apply a 50% markup, you’d charge $750.

Margin: Merriam-Website gives us this definition for margin: “the difference which exists between net sales and the cost of merchandise sold and from which expenses are usually met or profit derived. That is, margin is the percentage of the selling price that’s profit. It’s what you keep after covering all your costs.

Example: If you charge $750 for a job and your costs are $500, your margin is 33%.

Think of markup as what you add to your costs, and margin as what you keep. They’re connected, but they don’t mean the same thing. Understanding this distinction can prevent you from underpricing—or overpricing—your services.

You can use this Margin Calculator to see your margin and markup with your pricing: Margin Calculator

AK DASH: A Smarter Way to Price

Here’s where AK DASH makes your life easier. Our new pricing feature for Scopes of Work lets you break down every job into its key components. You can input:

• Material Costs: Track what you’re spending on paint, lumber, or any other materials.

• Labor Costs: Include the wages for your crew or hourly rates for subcontractors.

• Subcontractor Costs: Log what you’re paying outside contractors for specialized work.

• Equipment Costs: Account for the tools and machinery you’re using to get the job done.

Once your costs are entered, you can set your pricing strategy. Whether you’re calculating based on markup, margin, or quantity discounts, AK DASH ensures your proposals and invoices are always accurate. No more guessing, no more math mistakes—just pricing that reflects the value you’re delivering.

Why It Matters: The Danger of Guessing

Imagine you’re pricing a job to paint a parking lot, including handicap stencils. Without understanding your costs and using a consistent method, you might underprice the job. Maybe you forget to account for the stencil equipment rental or the cost of extra labor for touch-ups. The result? You’re working harder for less profit.

On the flip side, overpricing can be just as damaging. You risk scaring off potential clients or losing bids to competitors with more competitive pricing. AK DASH eliminates the guesswork by giving you a clear picture of your costs—and the flexibility to adjust pricing based on the job.

How to Use AK DASH to Set Profitable Pricing

1. Input Your Costs

Break down every aspect of the job into material, labor, subcontractor, and equipment costs. Enter these into the AK DASH pricing tool.

2. Choose Your Pricing Strategy

Decide whether you’ll calculate prices using markup, margin, or both. Use the tool to adjust percentages until you’re hitting your desired profit margins.

3. Set Quantity Discounts

If your business handles large-scale jobs, offering discounts for higher quantities can be a smart way to win big contracts. AK DASH lets you easily apply these discounts without sacrificing profitability.

4. Generate Proposals and Invoices

Once your pricing is set, AK DASH integrates it directly into your proposals and invoices. Clients see clear, professional documentation, and you avoid surprises when the job’s done.

5. Track Performance

As you complete jobs, use AK DASH to review how your pricing strategies are working. Did you hit your target margin? Are there costs you can cut? Use these insights to fine-tune your approach over time.

Tips for Pricing Success

• Know Your Market: Understand what your competitors are charging for similar jobs. This gives you a baseline to ensure your prices are competitive.

• Account for Hidden Costs: Don’t forget about overhead like office expenses, insurance, or equipment depreciation. AK DASH helps you factor these in.

• Stay Flexible: Every job is different. Use AK DASH to adjust your pricing on the fly based on job specifics.

• Focus on Value: Clients care about quality, reliability, and professionalism—not just the lowest price. Make sure your pricing reflects the value you bring.

Ready to Price Like a Pro?

With AK DASH’s new pricing feature, you’ve got everything you need to price your work profitably and confidently. No more spreadsheets, no more guesswork—just smart, data-driven pricing that helps you win jobs and grow your business.

Start your free trial today and see how AK DASH can transform the way you run your contracting business. It’s time to stop guessing and start growing.

Sign up for AK DASH now to take your pricing—and your business—to the next level.