What's the difference between cost and profit markups?

What's the difference between cost and profit markups?

Megan Sullivan

When you add new markups to your project, you will set whether the markup should be treated as cost or profit.

For example, you might add "Cost" markups for things like taxes or commissions. At the end of the day, the amounts and calculations from these markups are not building your profit, but rather helping you account for other expenses.

By designating a markup as "Cost", it will be included on the main table in the "Budget" tab and will roll up to the "Costs" total at the bottom of the Budget.

On the other hand, calculations that you set up for "Profit" would include things like your company's margin.

Any amounts calculated as "Profit" will not appear in the main budget table for Fixed Price projects and, therefore, will not be factored into your team's costs. Those amounts are still factored into the overall "Profit" line on the budget page, though, since that profit is determined based on the difference between the project's total sell price and your costs.

On Open Book projects, your Budget will include all of your costs and profit markups, broken down and sorted by their respective accounting codes.

A "Tax" calculation is a unique form of a cost markup, but for displaying amounts on the Budget, it behaves just like a "Cost" markup.