



 
Hi Nadja, The client's bill from you is made up of two pieces, the pay rate and a markup. If you want to express the markup as a percentage you have two choices. The first is to express the markup as a percentage of what the client pays. Thus from the client's point of view, when he sees your bill he knows that 4% of that bill is your markup. This is the margin. Hence, since 4% of the charge rate is the markup 96% of the charge rate is the pay rate. That is
and thus
The second option is to express the markup as a percentage of your costs. In this case you would add 4% of the pay rate to obtain the charge rate. In this case
This method is commonly called the percentage markup. Since you are quoting a 4% margin you are using the correct calculation. I hope this helps,  


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