Both describe the same profit. They divide it by different things. Margin divides by the client price; markup divides by the subcontractor's price or your cost.
The mix-up costs money when a firm decides on a margin, say 20%, and then adds 20% to the subcontractor's price. That gives a margin of 16.7%, not 20%. On a large subcontract package the gap is real money.
| Margin you keep | Markup to add | On a £10,000 subcontract, charge the client |
|---|---|---|
| 10% | 11.1% | £11,111.12 |
| 15% | 17.6% | £11,764.71 |
| 20% | 25% | £12,500 |
| 25% | 33.3% | £13,333.34 |
| 30% | 42.9% | £14,285.72 |