How to Calculate the Best Markup for a Construction Project
Minimum Bottom Line Profit Should Average 9.4%!
For Trades & Subcontractors, at Least 11%
After Income Taxes Are Paid!
Every construction project has costs beyond the direct costs and the contractor wants to earn a profit. To cover these costs he must have an appropriate markup. The contractor must give consideration to many variables and circumstances to calculate the best markup for a construction project. Determining the best markup percentage on cost requires the contractor consider his indirect costs, overhead, taxes, and final profit desired.
The contractor should give consideration to the variables that impact indirect and overhead costs to determine the final markup percentage. See What is a Reasonable Profit in Construction? for more information about these types of costs. Another article that is beneficial and covers more details about indirect costs is Best Format of the Construction Profit and Loss Statement .
Indirect costs average 18 to 23% plus overhead costs of