Coordination, planning and managing any project should be a project cost and should not be taken out of profit. I think you should add all that time up at a reasonable rate and add it to the project cost, then add your 30% for profit.
Yes. Too many contractors charge like shit and then wonder how every one is making money. The cost of doing business with a reputable and licensed contractor is expensive. Workman’s cops, liability,rent, 401k etc….
$1,000 on $10k is absolutely nothing. You can’t pay for shit. I do larger high end projects so my margins as a percentage of revenue are generally lower but gross is higher. My subs who are doing any work for say $10k probably have $3k-$4k of costs into it.
That doesn’t scale though. We do 3-4 million per quarter, my customers would shit if they found out we were profiting over 10%. That’s all expenses, all overhead, all burdens covered and, say, a million a year in profit. Any more would be damaging to our relationships.
I’m in Michigan, and I’m 50-60% margin on everything starting at 100k… smaller stuff, say under 50k I don’t touch if I can’t get 75% and the real small say, 25k range, it’s 100% margin or it doesn’t make the schedule.
I mean that’s hard, how else would you say it? High end, or higher end gives people a good idea as to the potential projects you’re willing to take on. Ironically the richest guy I know does sub work for dirt cheap new builds >$500,000
Off topic.
We still do some work for large builders. We have only taken enough work so that the work covers our overhead and all of the high-end profit ends up in RE.
We used to do a significant amount of builder work and its a headache. You can make a shit load of money but the deadlines and headaches that come with it are extreme. Cost control and efficiency need to be on point or you will lose your ass.
I would argue there's a difference between a carpenter that installs pre-fab cabinets and puts in basic trim work, and a carpenter that builds custom cabinets out of black walnut with intricate trim work.
If I went around saying "I do high-end finish carpentry" I would be saying I do mostly the latter and not the former of the two and my prices would be a reflection of that.
It's not a skill thing, it's a market thing. It generally means you do residential work, but for rich people who are spending a lot of money per square foot. It's different from something like tract homes, in the same way that building dairy barns is a different part of commercial from building strip malls. It's a specialization within the residential sector.
I see three levels of carpenter. Apprentice, journeyman, master.
Working with materials that cost a lot does not mean high-end to me. Craftsmanship is high end to me.
I see now the majority look at high-end as a dollar sign. I will keep that in mind going forward reading post on Reddit
Materials are easily considered high-end.
Pre Fab vs Walnut. Concrete paver vs porcelain paver.
Obviously, the craftsmanship that goes into installing the materials goes hand and hand. I have seen $30 an sq foot paper-faced glass tile installed like dog shit. Worst install I've ever seen.
What sort of craftsmanship are you seeing on a prefab cabinet?
Also, if your craftsmanship is high end shouldn't it be expensive? Are you charging apprentice rates when you're a master?
It describes the market segment, not the work.
If you say you do high-end carpentry, you could be describing the quality of your work.
If a GC says they take high-end contracts, that means contracts of a certain type and value.
It can be, but not in this context as it’s relevant. The difference in profit from marking up material can be huge. For example, you remodel a bathroom for your average person. The material might be 3k and your mark up is 20%. That is $600 in profit.
Now, if you do high end, the same type of materials (toilet, tile, faucet) might have cost you $15k instead of 3k. If you were to add the same mark up, you get 3k in profit.
That’s why they can do lower mark ups and still get higher profit
I guess this is where my line of thinking veers off. The term high-end to me means quality. If something is poor quality with a high price tag, I would not consider that high-end.
You would think that would also apply, but you can find good quality for a good price and poor quality for a high price tag. So, you shouldn’t assume that just because you’ll be paying more the quality will be better.
Not quite, you said that high end = high quality (without regard of price).
I said that High End = High quality and expensive materials and (high quality craftsmanship should be expected but not guaranteed)
Is it bragging to explain that you work on multi million dollar projects so your margins are different or is it just communicating? 15% margin can be a huge profit for massive projects while 60% might just barely make a smaller project worth doing.
I’m not sure how I could’ve worded that more neutrally. I do projects in the 5 to mid 6 figures level while other groups in my same office are doing 10 figure projects. Figured my input would help explain why people differentiate between high and low end work.
It's not. It's giving other contractors an idea of which end of the market they serve.
There's a big difference between working on a six-figure and seven-figure house. Or low-end commercial vs high-end.
I don't believe other contractors are referring to their work quality. I know we work at both ends and most projects are in the middle.
GC here—Good explanation. I do high and renovation work. That means I’m doing $200-300K kitchens and $130-150 bathroom renovations. That explains who my clients are and what kind of work and finishes I am doing. I make 30% net/in my pocket profit after all expenses are paid. It’s not bragging— just the facts.
In this case. Because it’s important for the discussion at hand - generally percentages charged vary based on the projected cost of construction. Contractors that do jobs with smaller budgets generally charge a higher percentage than contractors that do jobs with larger projected cost of construction. So “high-end” in this context means bigger cost of construction.
Yeah your labor overhead alone is going to be 25% over salary, especially if you’re talking about paying people that are on site doing the work. And that number assumes you don’t give them any benefits.
When I was working for a subcontractor I set up my spreadsheet that self calculated money for all the overhead. I figured out anticipated yearly spend on the lights and rent by my target sales and worked out a average job percentage to cover. Had some drop-downs that I would set anticipated hours per week for various in house management and a PIA factor that I had to base on the meeting with the client.
That way you can set your end of year profit target and know your accuracy along with project specific.
If you're not good with Excel, there would be people you can reach out to like Fiverr who could create one for you as simple or intricate as your want.
No..... the profit is the company's. The company pays OP. That 30% profit also includes company overheads - the costs that it takes to run a construction business, such as tools, equipment, fuel and lots of your time, tears, sweat and blood.
If you’re implying this is a bad thing then you’re wrong. Owning a businesses means you own the profits and losses along with whatever paycheque you are taking. These two things have different tax treatments and can get quite complicated to set up properly.
I generally price my jobs as everything all in, labor, material, and all overhead costs. I pay myself a lead mechanic rate in that calculation. Once I have that number I throw on my percentage on top for profit.
Generally I shoot for 18% depending on the type of work and how big the job actually is. If it's a 1-2 hour job it's going to be much higher. I can't show up to a house for 1 hour and just charge $178 when I'm paying 2 guys and a truck to be there. If that was the case I'd need to be constantly dealing with scheduling and not paying myself for multiple hours per day because of customer relations and driving times. but if it's an all day job, I can charge $150 per hour for labor and throw on another $28 per hour and be happy since I only had to field one customer for the day.
I swear I spend more time making customers feel good than working some days and if I'm not invoicing, estimating, or installing, I'm not being productive. I can only talk about the same project so many times before it becomes a waste.
I guess there are caveats, but it's the same with materials if you buy in a huge bulk typically that line item is a little cheaper since the price can typically be cheaper
Yeah I'm in millwork. Biggest time killer can be design process and client relations. 90% of millwork is quoted, not cost plus so design dynamics can get muddy part way through projects. Especially direct to client, which I try not to do anymore unless I get them to buy my drawings first. But even getting to that point takes a lot of hours.
Based on my experience, making $1500 on a $10,000 project even after paying for overhead, supervision, etc. is on the low end (I’d shoot for double that). Only time I think it even could *possibly* be worth it is if the work is an in/out in 1 day scenario. Even then, tough to keep the lights on doing small jobs at that margin.
I’m a construction estimator, 25-30% is about normal for direct contract work, 10-15% for public RFPs. We go 40% when we know there is no risk of being priced out.
Also like other people had said, build project management into your cost. Don’t work for free.
Guarantee dude is underestimating costs. Needs to be tracking everything in spreadsheets on every project and until they get better at hitting prices, I’d say shoot for $5k then when they realize they missed something, it’s not gonna break their bank.
So typically you'd take all estimates hours for a project, add a profit margin to those hours to ensure employees are paid for..after all expenses, payroll and everything else from the cost of the project is totalled up..then you add an additional 20-50% markup and even higher if you provide good value.
For instance we have many projects where we have 100%+ markup for our services. But the client is very happy, since they generate 20+ million a year for ~$84k/year.
If you aren't accounting for your own labour, you're doing a poor job at accounting. A job should idealy be profitable *on top* of your own labour costs. That way you can gauge whether the risks of running your own company are covered by your profit margins. Otherwise you might as well get a dayjob.
Think of it this way, how many $10k projects do you land in a month? How long does a $10k project take? Can you run multiple jobs at once?
If the answer to the first question is less than 5. How you gonna live?
It’s really about how long and how many projects you have. For instance in plumbing if you can get 1 water heater you can make amazing money (while stilll being cheap/fair to customer). But still at 50-75% profit. However if a contract came in for 20 water heaters, yeah 20 percent would be fine.
Self perform or subcontract out? Service or construction? Residential or commercial?
Self performing GCs and trades should make higher than outsourcing. Residential typically gets higher than commercial,which depends on volume. Service is higher than construction.
I shoot for a 35% average, generally the margin per job is inversely proportional to the job cost. I do anything from $200 service calls to $200k custom homes.
I typically avoid jobs in that price range because I have found they take nearly as much work and effort as jobs in the $25-50k range.
That being said, if I do take on something like that it needs to be 1)quick and simple, and 2) I am going to bid at about 100% profit margin. For example, if a small deck cost $5000 in labor and materials, I would bid at $10k
Personally I don’t bid anything, we take the customers budget and give them what we can within their means… do the best we can to meet their expectations, but profit margins are t negotiable. And I absolutely won’t estimate or bid any projects.
Strictly hired by referral, and just invoice on a progress schedule.
This is the formula for success.
1) figure up your material and labor costs. Don’t undercut yourself on labor. It’s easy to do.
2) know your overhead %. This is your phone, trucks, WC, GL, etc.. This is based on historical data.
3) know what % you want to make in profit.
Let’s assume your job cost (item #1) is going to be $100,000. Nice round number.
Let’s assume your overhead is 20%
Let’s assume you want to make 10%
The answer is $130,000, right? nope. 130k would be marking it up 30%. You don’t want a markup, you want a profit margin. Your OH&P is 30%, so you take the inverse of that, which is 70% (100%-30%=70% or .7) and DIVIDE by it.
100,000 / .7= **$142,857.14**
I’m looking for more than that, especially if we are moving the decimal to the left one space.
My company operated for years doing it the 30% mark up way. Now we do it the latter way and have been significantly more profitable. It’s incredible what a good cfo will do! (We didn’t have one before , just a mom and pop GC).
It’s fair if the client says yes and is happy with the work.
On jobs less than 5k I’m at around 50% profit. On jobs 5k-10k I’m usually around 30-40% profit. 10-20k ~30% etc.
I’m also not a GC, I pretty much do one thing which is sorta specialized and folks will pay good money to have it done correctly because it’s easy to screw up.
Too much. I'd rather make $1,000 on a $10,000 job than work for someone else making $600 a week getting yelled at. But my area is competitive here in south Texas.
There are some straight up snidley whiplash mother fuckers in here with their add 50% on materials and then add overhead, profit etc type shit. Man no wonder housing is expensive AF. I'm not saying we don't deserve to make our money but cmooonnnnn. This percentage bullshit is for people who are too lazy or don't know how to run a business. Same kind of thing as asking "what's your square foot price" when building a new home....it's usually bullshit. Do your due diligence , figure out your market, your business costs, and what you personally need to make to be comfortable. If your number is wildly high or wildly low compared to competitors then you need to adjust your business or lifestyle accordingly (or find a different field of work lol).
Im charging a minimum of double the cost of materials. Small job might be triple. Odd ball commercial job that gets bid out might get bid at 10x if it’s really weird. I did this one commercial job before, very odd job, but cleared 10k in profits in one day, one man job. It was high risk, high reward.
The real way is to obtain a professional skill that can be worked into a trade required. Then GC your own job and do the appropriate skill so it gets you more on site. It does split your time though :(
Now I see the problem in our housing crisis.
I used to charge 10% over labor and material for construction management and my potential clients would say that 'its robbery'.
Where tf are you guys to have projects in the 20 or 40% markup and not have pushback? I want to be there!!
That’s what happens when everyone wants to be greedy and not care about the average American. It’s screw everyone on your way to the top because someone else is screwing you over in some shape way or fashion.
Yup professionals will shit on diyers after charging themselves out of a job.
I used to work in an accounting field related to construction and know how to price a job. Some stuff I've gotten quoted is insane with easily 40 percent markups and that's with me being generous on wages being paid. Something like $ 3.5 grand above material cost on a 4 hour job for two people.
I’m no expert by any means but I’ve had a lot of work done around my house lately. As a customer, no one expects folks to work and not make a profit. But folks don’t want to feel like they are being ripped off either. If businesses are going to charge “high end prices” then at least come with credentials/certifications to prove you deserve “high end payment”. Too many people work for a few years then start their own company using only experience as justification for 30-40% profit margins only to end up doing mediocre work. This is evident if you’ve ever had a client/customer ask you to fix work you did. Trades are tough jobs period! Get credentials and training to justify cost. If you wont give your client an itemized bill showing OH, materials, and profit then you’re probably doing something wrong. Just a customer’s point of view.
Coordination, planning and managing any project should be a project cost and should not be taken out of profit. I think you should add all that time up at a reasonable rate and add it to the project cost, then add your 30% for profit.
Yes. Too many contractors charge like shit and then wonder how every one is making money. The cost of doing business with a reputable and licensed contractor is expensive. Workman’s cops, liability,rent, 401k etc…. $1,000 on $10k is absolutely nothing. You can’t pay for shit. I do larger high end projects so my margins as a percentage of revenue are generally lower but gross is higher. My subs who are doing any work for say $10k probably have $3k-$4k of costs into it.
Work for a large sub, anything under 50k we need to make 40-50% on for it to be worth our time. OH is a bitch.
That’s what I do also
That doesn’t scale though. We do 3-4 million per quarter, my customers would shit if they found out we were profiting over 10%. That’s all expenses, all overhead, all burdens covered and, say, a million a year in profit. Any more would be damaging to our relationships.
That's real talk. I'm at 20%, but we include the 8.5% sales tax in our price. If I was over that, there's no way I would book.
Guess it depends on market. We’re comfortable at 18% in ours. Do roughly 10-15 mil in profit every year.
We are Canadian o&g, embedded construction, heavy industrial. There are lots of service providers out there attempting to undercut us.
*Buy $19.99 for $40.00* Eric's Premium Prices.
I’m in Michigan, and I’m 50-60% margin on everything starting at 100k… smaller stuff, say under 50k I don’t touch if I can’t get 75% and the real small say, 25k range, it’s 100% margin or it doesn’t make the schedule.
Why do many contractors like to throw in “high end” when they talk about their work?
Generally in reference to the part of the market they target and serve
It’s not bragging?
I mean that’s hard, how else would you say it? High end, or higher end gives people a good idea as to the potential projects you’re willing to take on. Ironically the richest guy I know does sub work for dirt cheap new builds >$500,000
Off topic. We still do some work for large builders. We have only taken enough work so that the work covers our overhead and all of the high-end profit ends up in RE. We used to do a significant amount of builder work and its a headache. You can make a shit load of money but the deadlines and headaches that come with it are extreme. Cost control and efficiency need to be on point or you will lose your ass.
Makes sense. Doing 2-3 new subdivisions worth of tract homes adds up to quite a lot of work.
Not many people are proud about doing low end, slum lord level work.
I say I do carpentry, not high end carpentry. Adding “high end”, to me, comes off as snobby or an attitude of superiority. Just me
I would argue there's a difference between a carpenter that installs pre-fab cabinets and puts in basic trim work, and a carpenter that builds custom cabinets out of black walnut with intricate trim work. If I went around saying "I do high-end finish carpentry" I would be saying I do mostly the latter and not the former of the two and my prices would be a reflection of that.
It's not a skill thing, it's a market thing. It generally means you do residential work, but for rich people who are spending a lot of money per square foot. It's different from something like tract homes, in the same way that building dairy barns is a different part of commercial from building strip malls. It's a specialization within the residential sector.
Listen, u/hammerhitnail is a troll. He's intentionally feigning ignorance inorder to be obliquely confrontational. Ignore him
Exactly! This is what I call high-end. You get what you pay for. Carpenter or Craftsman.
I see three levels of carpenter. Apprentice, journeyman, master. Working with materials that cost a lot does not mean high-end to me. Craftsmanship is high end to me. I see now the majority look at high-end as a dollar sign. I will keep that in mind going forward reading post on Reddit
Materials are easily considered high-end. Pre Fab vs Walnut. Concrete paver vs porcelain paver. Obviously, the craftsmanship that goes into installing the materials goes hand and hand. I have seen $30 an sq foot paper-faced glass tile installed like dog shit. Worst install I've ever seen. What sort of craftsmanship are you seeing on a prefab cabinet? Also, if your craftsmanship is high end shouldn't it be expensive? Are you charging apprentice rates when you're a master?
It's the value of THE HOUSE.
I do high end millwork. It's very different from production millwork. Its standard industry terminology.
It describes the market segment, not the work. If you say you do high-end carpentry, you could be describing the quality of your work. If a GC says they take high-end contracts, that means contracts of a certain type and value.
It can be, but not in this context as it’s relevant. The difference in profit from marking up material can be huge. For example, you remodel a bathroom for your average person. The material might be 3k and your mark up is 20%. That is $600 in profit. Now, if you do high end, the same type of materials (toilet, tile, faucet) might have cost you $15k instead of 3k. If you were to add the same mark up, you get 3k in profit. That’s why they can do lower mark ups and still get higher profit
I guess this is where my line of thinking veers off. The term high-end to me means quality. If something is poor quality with a high price tag, I would not consider that high-end.
You would think that would also apply, but you can find good quality for a good price and poor quality for a high price tag. So, you shouldn’t assume that just because you’ll be paying more the quality will be better.
Isn’t that what I just said?
Not quite, you said that high end = high quality (without regard of price). I said that High End = High quality and expensive materials and (high quality craftsmanship should be expected but not guaranteed)
Is it bragging to explain that you work on multi million dollar projects so your margins are different or is it just communicating? 15% margin can be a huge profit for massive projects while 60% might just barely make a smaller project worth doing.
All I did was ask a question. I’m not pushing the issue with anybody. Everyone will have their opinion this is Reddit everyone calm down.
I’m not sure how I could’ve worded that more neutrally. I do projects in the 5 to mid 6 figures level while other groups in my same office are doing 10 figure projects. Figured my input would help explain why people differentiate between high and low end work.
Thank you
Just calm down!
It's not. It's giving other contractors an idea of which end of the market they serve. There's a big difference between working on a six-figure and seven-figure house. Or low-end commercial vs high-end. I don't believe other contractors are referring to their work quality. I know we work at both ends and most projects are in the middle.
GC here—Good explanation. I do high and renovation work. That means I’m doing $200-300K kitchens and $130-150 bathroom renovations. That explains who my clients are and what kind of work and finishes I am doing. I make 30% net/in my pocket profit after all expenses are paid. It’s not bragging— just the facts.
Ok
Ego
In this case. Because it’s important for the discussion at hand - generally percentages charged vary based on the projected cost of construction. Contractors that do jobs with smaller budgets generally charge a higher percentage than contractors that do jobs with larger projected cost of construction. So “high-end” in this context means bigger cost of construction.
Yeah your labor overhead alone is going to be 25% over salary, especially if you’re talking about paying people that are on site doing the work. And that number assumes you don’t give them any benefits.
10 k job is like 3 to 4 days at the most
When I was working for a subcontractor I set up my spreadsheet that self calculated money for all the overhead. I figured out anticipated yearly spend on the lights and rent by my target sales and worked out a average job percentage to cover. Had some drop-downs that I would set anticipated hours per week for various in house management and a PIA factor that I had to base on the meeting with the client. That way you can set your end of year profit target and know your accuracy along with project specific. If you're not good with Excel, there would be people you can reach out to like Fiverr who could create one for you as simple or intricate as your want.
Never exclude your time, labor and expertise. If you arent paying yourself then you arent running a profitable business.
So pay yourself twice? 😂
No..... the profit is the company's. The company pays OP. That 30% profit also includes company overheads - the costs that it takes to run a construction business, such as tools, equipment, fuel and lots of your time, tears, sweat and blood.
You forgot to add future divorce costs and alcohol into your overhead
Don't forget the money that needs to go to the casino as well.
Scratch cards and e cigs too
Well, yeah and that extra salary for “the secretary “😜
If you’re implying this is a bad thing then you’re wrong. Owning a businesses means you own the profits and losses along with whatever paycheque you are taking. These two things have different tax treatments and can get quite complicated to set up properly.
I generally price my jobs as everything all in, labor, material, and all overhead costs. I pay myself a lead mechanic rate in that calculation. Once I have that number I throw on my percentage on top for profit.
What's your percentage?
Generally I shoot for 18% depending on the type of work and how big the job actually is. If it's a 1-2 hour job it's going to be much higher. I can't show up to a house for 1 hour and just charge $178 when I'm paying 2 guys and a truck to be there. If that was the case I'd need to be constantly dealing with scheduling and not paying myself for multiple hours per day because of customer relations and driving times. but if it's an all day job, I can charge $150 per hour for labor and throw on another $28 per hour and be happy since I only had to field one customer for the day. I swear I spend more time making customers feel good than working some days and if I'm not invoicing, estimating, or installing, I'm not being productive. I can only talk about the same project so many times before it becomes a waste.
Charge what you need to make a living. Adjust as you get feedback. Shoot for the stars, aim for the skies
Smaller the job higher the margin typically
I find the opposite if you're accounting for time.
I guess there are caveats, but it's the same with materials if you buy in a huge bulk typically that line item is a little cheaper since the price can typically be cheaper
Then you should think about charging more. You make 100% profit on $100 job, that’s still chickenfeed.
Yeah I'm in millwork. Biggest time killer can be design process and client relations. 90% of millwork is quoted, not cost plus so design dynamics can get muddy part way through projects. Especially direct to client, which I try not to do anymore unless I get them to buy my drawings first. But even getting to that point takes a lot of hours.
Based on my experience, making $1500 on a $10,000 project even after paying for overhead, supervision, etc. is on the low end (I’d shoot for double that). Only time I think it even could *possibly* be worth it is if the work is an in/out in 1 day scenario. Even then, tough to keep the lights on doing small jobs at that margin.
I’m a construction estimator, 25-30% is about normal for direct contract work, 10-15% for public RFPs. We go 40% when we know there is no risk of being priced out. Also like other people had said, build project management into your cost. Don’t work for free.
No wonder I see prices all over the place. I have greedy guy on the left and no clue guy on the right.
Everyone hates paying but they love taking. I bet you build houses for free on the weekends?
When I can with the church, yes. No im just kidding, calm down dude.
I would try to make at least 3-4k
Guarantee dude is underestimating costs. Needs to be tracking everything in spreadsheets on every project and until they get better at hitting prices, I’d say shoot for $5k then when they realize they missed something, it’s not gonna break their bank.
So typically you'd take all estimates hours for a project, add a profit margin to those hours to ensure employees are paid for..after all expenses, payroll and everything else from the cost of the project is totalled up..then you add an additional 20-50% markup and even higher if you provide good value. For instance we have many projects where we have 100%+ markup for our services. But the client is very happy, since they generate 20+ million a year for ~$84k/year.
If you aren't accounting for your own labour, you're doing a poor job at accounting. A job should idealy be profitable *on top* of your own labour costs. That way you can gauge whether the risks of running your own company are covered by your profit margins. Otherwise you might as well get a dayjob.
This - everyone working needs to be paid for their time. Company overhead and profit goes on top, after materials and labor.
I aim for 30% net on everything below a 100k
Think of it this way, how many $10k projects do you land in a month? How long does a $10k project take? Can you run multiple jobs at once? If the answer to the first question is less than 5. How you gonna live?
Seems way too low.
It’s really about how long and how many projects you have. For instance in plumbing if you can get 1 water heater you can make amazing money (while stilll being cheap/fair to customer). But still at 50-75% profit. However if a contract came in for 20 water heaters, yeah 20 percent would be fine.
Self perform or subcontract out? Service or construction? Residential or commercial? Self performing GCs and trades should make higher than outsourcing. Residential typically gets higher than commercial,which depends on volume. Service is higher than construction.
Yes
I shoot for a 35% average, generally the margin per job is inversely proportional to the job cost. I do anything from $200 service calls to $200k custom homes.
Shoot for 50 so you end up landing at 25-30
Why not including your own time... You can't pay rent, food, bills, invest in equipment, go on holiday ect ect on a thank you.
I typically avoid jobs in that price range because I have found they take nearly as much work and effort as jobs in the $25-50k range. That being said, if I do take on something like that it needs to be 1)quick and simple, and 2) I am going to bid at about 100% profit margin. For example, if a small deck cost $5000 in labor and materials, I would bid at $10k
Stop charging based on percentages and start charging based on the math of what it takes to run and operate your business at a profit.
But that would require extra work and an actual understanding of your business and market ain't no one got time for that /s
Yeah. That’s how almost everyone operates in this business. No clue of the numbers.
Wait, you guys are getting jobs bidding in a 30% profit margin?
Personally I don’t bid anything, we take the customers budget and give them what we can within their means… do the best we can to meet their expectations, but profit margins are t negotiable. And I absolutely won’t estimate or bid any projects. Strictly hired by referral, and just invoice on a progress schedule.
This is the formula for success. 1) figure up your material and labor costs. Don’t undercut yourself on labor. It’s easy to do. 2) know your overhead %. This is your phone, trucks, WC, GL, etc.. This is based on historical data. 3) know what % you want to make in profit. Let’s assume your job cost (item #1) is going to be $100,000. Nice round number. Let’s assume your overhead is 20% Let’s assume you want to make 10% The answer is $130,000, right? nope. 130k would be marking it up 30%. You don’t want a markup, you want a profit margin. Your OH&P is 30%, so you take the inverse of that, which is 70% (100%-30%=70% or .7) and DIVIDE by it. 100,000 / .7= **$142,857.14** I’m looking for more than that, especially if we are moving the decimal to the left one space.
My company operated for years doing it the 30% mark up way. Now we do it the latter way and have been significantly more profitable. It’s incredible what a good cfo will do! (We didn’t have one before , just a mom and pop GC).
It’s fair if the client says yes and is happy with the work. On jobs less than 5k I’m at around 50% profit. On jobs 5k-10k I’m usually around 30-40% profit. 10-20k ~30% etc. I’m also not a GC, I pretty much do one thing which is sorta specialized and folks will pay good money to have it done correctly because it’s easy to screw up.
What?
Too much. I'd rather make $1,000 on a $10,000 job than work for someone else making $600 a week getting yelled at. But my area is competitive here in south Texas.
You guys are making money?
u mean 101
Raise your rates and know your worth my man. You’re basically working for free.
Omg mg
I shoot for a 30-40% margin on most jobs. Last year we ended the year with a 37% profit
There are some straight up snidley whiplash mother fuckers in here with their add 50% on materials and then add overhead, profit etc type shit. Man no wonder housing is expensive AF. I'm not saying we don't deserve to make our money but cmooonnnnn. This percentage bullshit is for people who are too lazy or don't know how to run a business. Same kind of thing as asking "what's your square foot price" when building a new home....it's usually bullshit. Do your due diligence , figure out your market, your business costs, and what you personally need to make to be comfortable. If your number is wildly high or wildly low compared to competitors then you need to adjust your business or lifestyle accordingly (or find a different field of work lol).
I like to run 20-30% cost any less than that i might as well be working for someone else
That’s a 10% margin. Not even a 25-30% markup…
Im charging a minimum of double the cost of materials. Small job might be triple. Odd ball commercial job that gets bid out might get bid at 10x if it’s really weird. I did this one commercial job before, very odd job, but cleared 10k in profits in one day, one man job. It was high risk, high reward.
Shoot for 50% operating and 30% net
The real way is to obtain a professional skill that can be worked into a trade required. Then GC your own job and do the appropriate skill so it gets you more on site. It does split your time though :(
30% always
Our Company has a 37% goal. I can hit those at 40-45% all day. Anything in thr 20's is no Bueno. Over 100k is easy 40%, big money is easier to manage.
No one wants to work anymore
35% minimum is my rule.
Now I see the problem in our housing crisis. I used to charge 10% over labor and material for construction management and my potential clients would say that 'its robbery'. Where tf are you guys to have projects in the 20 or 40% markup and not have pushback? I want to be there!!
That’s what happens when everyone wants to be greedy and not care about the average American. It’s screw everyone on your way to the top because someone else is screwing you over in some shape way or fashion.
Yup professionals will shit on diyers after charging themselves out of a job. I used to work in an accounting field related to construction and know how to price a job. Some stuff I've gotten quoted is insane with easily 40 percent markups and that's with me being generous on wages being paid. Something like $ 3.5 grand above material cost on a 4 hour job for two people.
Holy shit. One and done and take the rest of the year off!
Mark up material 50-100% before adding OH/P
I’m no expert by any means but I’ve had a lot of work done around my house lately. As a customer, no one expects folks to work and not make a profit. But folks don’t want to feel like they are being ripped off either. If businesses are going to charge “high end prices” then at least come with credentials/certifications to prove you deserve “high end payment”. Too many people work for a few years then start their own company using only experience as justification for 30-40% profit margins only to end up doing mediocre work. This is evident if you’ve ever had a client/customer ask you to fix work you did. Trades are tough jobs period! Get credentials and training to justify cost. If you wont give your client an itemized bill showing OH, materials, and profit then you’re probably doing something wrong. Just a customer’s point of view.
So my managers the only scum with a religious 50% margin minimum?
70% - 90% profit is fair