Two percentages describe the same dollars. Markup is profit as a percentage of cost. Margin is profit as a percentage of price. On $100,000 of cost sold at $120,000, the $20,000 is 20% markup but only 16.7% margin.
The conversions are simple: margin = markup ÷ (1 + markup), and markup = margin ÷ (1 − margin). To price from a target margin, divide cost by (1 − margin): $100,000 ÷ 0.80 = $125,000 for a 20% margin, which is a 25% markup.
The mix-up costs real money. If your company plans for a 20% gross margin but prices change orders at 20% markup, every change quietly earns less than the plan. Across a year of change orders that difference is your overhead going unpaid.
Pick one language for internal targets (most financial reports use margin), know which one your contract uses for change order markup (usually markup on cost), and convert deliberately between them.
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Markup vs margin calculator
With $100,000 of cost and a 20% target margin, note the selling price and the equivalent markup. Then switch the target to 20% markup and note the margin you actually earn. Write both conversions on a sticky note for your estimators.