Mark up is the amount added to the cost of a good or service to arrive at its selling price. It is added to the total cost incurred by the producer in order to make a profit and, in construction, to recover overheads and allow for risk.
In tendering, the contractor’s estimator prepares the net cost of the work, and the mark up is then decided by senior management at the tender review or adjudication stage, taking into account the market, competition, workload and the risks of the project. It is commonly expressed as a percentage of cost. Mark up should not be confused with margin: a 10% mark up on cost gives a margin of about 9.1% of the selling price. For the QS, mark ups also appear as the percentage additions on daywork and, in effect, as the Fee under NEC contracts.
Related terms: Overheads and Profit, Margin, Tender Adjudication, Fee.
