# What is markup?

Source: https://launch-rec.com/glossary/markup. Category: Commercials. Market: US and UK.

Also called: mark-up, markup percentage.

## Definition

The percentage added to a contractor's pay rate to reach the bill rate. Clients negotiate in markup; funders and investors think in margin.

## In practice

Markup is calculated on the pay rate: a $30.00 pay rate billed at $45.00 is a 50% markup. The same deal is a 25% gross margin, because margin is calculated on the bill rate. Neither number is wrong — they answer different questions.

Procurement teams cap markup in master service agreements, often at 35% to 45% for professional contract roles. If your burden is high, a capped markup can quietly push your real margin below the level your funding line assumes.

## Worked example

$30.00 pay × 1.50 = $45.00 bill → 50% markup, 25% gross margin.

## Related terms

- https://launch-rec.com/glossary/gross-margin
- https://launch-rec.com/glossary/bill-rate
- https://launch-rec.com/glossary/pay-rate