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Calculating Your Markup, Part 2

Note that costs listed in Get-A-Quote do not include the general contractor's markup. However, sections identified as "subcontract" include the subcontractor's markup. Here’s how to calculate markup:

Project Costs
Material  $50,000
Labor (with taxes & insurance) 40,000
Subcontract 10,000
Total job costs 100,000
Markup (25% of $100,000) 25,000
Contract price $125,000

Markup is $25,000 which is 25% of the total job costs ($100,000) but only 20% of the contract price ($25,000 divided by $125,000 is .20).

Here's an example using 19.87% markup on a larger commercial or industrial project:

Material $3,000,000
Labor (with taxes and insurance) 4,500,000
Equipment 1,000,000
Subcontracts 1,500,000
Total job cost $10,000,000
Indirect overhead (8%) 800,000
Direct overhead (7.3%) 730,000
Contingency (2%) 200,000
Profit (7.5%) 750,000
Contract price  $12,480,000

The total job cost shown above includes work done with the general contractor’s crew and work done by subcontractor-specialists. Note that markup for this general contractor (overhead, including supervision expense, contingency and profit) is $2,480,000. This amounts to 24.8% of the total job costs but only 19.87% of the contract price (2,480,000 divided by 12,480,000 is 0.1987).

< Calculating Your Markup, Part 1

 

 

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