The Contractor Fight with Tom Reber TCF1092: Markup vs Margin: Stop Guessing, Start Winning.
Jan 19, 2026
Are you working hard but finding your profits are stagnant? Discover the critical difference between markup and margin, and how misconceptions can cost you big. Learn the truth about margin measurement and the significant impact on your take-home pay. Tom explains why contractors need a 50% gross profit margin and dispels fears about raising prices. Plus, get practical tips on setting a minimum margin and creating a pricing strategy that values your work. It's time to stop guessing and start winning!
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Late-Night Quote That Costs You
- Tom Reber tells a common late-night quoting story where a contractor adds 20% to costs and thinks that's profit.
- He shows that adding 20% to $2,000 results in a $2,400 price but only a 16.6% margin, shorting the business hundreds to thousands annually.
Markup Versus Margin Defined
- Markup is what you add to cost and is calculated from cost, not price.
- Margin is what you actually keep and equals (price
- cost) / price, so markup ≠ margin.
Busy Revenue Doesn’t Equal Profit
- Running revenue without proper margin leaves owners exhausted and underpaid.
- The same revenue with correct margin (e.g., 50%) can massively increase owner profit without more work.