What is a good markup for a construction tender?

No official figure exists. The standard documents here do not set one. Work it out from your own overheads, the risks in the contract and what you need to earn.

What is the difference between markup and margin?

Markup is the amount added as a share of cost. Margin is the same amount as a share of price. A 15% markup is a 13.0% margin, and a 10% margin needs an 11.1% markup.

Should I add markup to provisional sums?

No. Enter them as printed. In World Bank documents, a percentage in the Contract Data covers overheads and profit on them. RICS NRM 2 bills provide for your percentage separately.

Can I show my markup as a separate line?

Only if the bill gives you a line. The World Bank's sample preamble puts these costs inside the rates. RICS NRM 2 makes separate provision for overheads and profit.

Does a higher markup mean more profit?

Not if it costs you the job, or if your costs run over. Markup only sets the price. Your profit depends on what the work actually costs and how much is measured.

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Answer · Tender terms explained

How do I calculate markup on a construction tender?

To calculate markup, add your overheads, risk allowance and profit, then divide that total by your direct cost. Markup is a share of cost. Margin is a share of price, so a 15% markup is a 13.0% margin. Under the World Bank's sample BOQ preamble, these amounts sit inside your rates.

No standard document sets a markup for you. Your own records and the tender's risks decide it. All numbers below are sample numbers.

Create your workspace Reviewed 01/11/26

What are the formulas?

Use these with your direct cost and your price.

Markup equals (price − direct cost) ÷ direct cost.
Margin equals (price − direct cost) ÷ price.
Price from a markup equals direct cost × (1 + markup).
Price from a target margin equals direct cost ÷ (1 − margin).
Margin from a markup equals markup ÷ (1 + markup).
Markup from a margin equals margin ÷ (1 − margin).

What goes into each part?

Keep the parts separate, so you can see what each one adds. Build direct cost first. See how to price a BOQ.

Part	What it covers
Direct cost	Labour, plant, materials, transport and subcontract work for each item, plus the site costs this job causes

Guide · EstimatingPricing a BOQBuild unit rates from labour, plant and materials, price the preliminaries, enter provisional sums as printed, add overheads and profit, then check the BOQ.Answer · Tender terms explainedBill of quantitiesA bill of quantities lists a tender's work items, units and estimated quantities. You enter the rates, and the priced bill becomes the basis for payment.Answer · Tender terms explained

See your rates and your margin together

Create a free workspace and upload a tender. Bidligence prices its BOQ line by line, and you set the margin.

Create your workspace See pricing

Head-office overheads	The share of your fixed business costs this contract must carry

Risk allowance	Risks the contract leaves with you that no rate has priced

Profit	What you aim to keep after all costs

Worked example with sample numbers

These numbers are invented, in a notional currency. They are not market rates or suggested percentages.

To spread this across the bill, multiply each net rate by 1.14.
A sample net rate of 200 per cubic metre becomes 228.
A sample provisional sum of 100,000 goes in as printed, so the bid total becomes 1,240,000.

Line	Amount	How
Direct cost	1,000,000	From your build-ups
Head-office overheads	60,000	Sample 6% of direct cost
Risk allowance	30,000	Sample 3% of direct cost
Profit	50,000	Sample 5% of direct cost
Total added	140,000	60,000 + 30,000 + 50,000
Price	1,140,000	1,000,000 + 140,000
Markup	14.0%	140,000 ÷ 1,000,000
Margin	12.3%	140,000 ÷ 1,140,000
Profit as a share of price	4.4%	50,000 ÷ 1,140,000

Why does markup against margin matter?

Confusing them makes you price too low. If you want a 10% margin and add 10%, your margin is only 9.1%. On the sample direct cost above, a 10% margin needs a price of 1,111,111. Adding 10% gives only 1,100,000.

Markup on cost	Gives this margin	Target margin	Needs this markup
10%	9.1%	5%	5.3%
15%	13.0%	10%	11.1%
20%	16.7%	15%	17.6%
25%	20.0%	20%	25.0%

How do I calculate markup on a construction tender?

What are the formulas?

What goes into each part?

See your rates and your margin together

Worked example with sample numbers

Why does markup against margin matter?

Where does the markup go in the bill?

Where Bidligence fits

Questions

Sources

How do I calculate markup on a construction tender?

What are the formulas?

What goes into each part?

Keep reading

See your rates and your margin together

Worked example with sample numbers

Why does markup against margin matter?

Where does the markup go in the bill?

Where Bidligence fits

Questions

Sources