Markup
also known as mark-up
The amount added to a cost to reach a selling price, usually expressed as a percentage of the cost - how agencies make margin on time and pass-through costs.
For example, an agency that pays a subcontractor $2,000 might mark it up 50% and bill the client $3,000, covering management and risk. The same logic sets prices on internal time under cost-plus pricing.
Why it matters to your firm: markup is the lever that turns cost into profit, on both staff time and pass-through expenses like subcontractors and media. Set it too low and busy projects still lose money; understanding markup versus margin keeps pricing honest.
Agencies commonly mark up subcontracted and pass-through work by roughly 15-50%, reflecting the value added and the cost of managing it.
- Passing costs through at zero markup, so management is unpaid.
- Confusing markup with margin when quoting.
- Hiding the markup in a way that erodes trust if discovered.