HVAC Markup vs Margin

A clear HVAC contractor guide to the difference between markup and margin, with formulas and practical examples.

Last reviewed: September 2026

Quick Answer

Use this page as a practical starting point, then adapt it to your company's costs, workflow, market and requirements.

Markup uses costCore item to cover on this page.

Margin uses selling priceCore item to cover on this page.

Do not mix termsCore item to cover on this page.

Use one methodCore item to cover on this page.

Check every priceCore item to cover on this page.

Markup and margin are different percentages. Markup measures profit against cost; margin measures profit against selling price.

Markup = profit ÷ cost × 100. If cost is $800 and selling price is $1,000, profit is $200 and markup is 25%.

Margin = profit ÷ selling price × 100. The same $800 cost and $1,000 sale produces a 20% margin.

A target expressed as margin requires a different selling price than the same number expressed as markup.

Keep your information current, document assumptions, compare estimates with actual results, and update the process when costs or workflows change.