What is the average markup for general contractors?

General contractors typically use a markup of 10-20% on total project costs, with 15-20% being most common. This covers overhead and profit. However, the required markup depends on your overhead percentage—contractors with 25% overhead need a 54% markup to achieve 35% gross margin.

What is the difference between markup and margin?

Markup is added to your cost to get the selling price (Cost × 1.20 = 20% markup). Margin is the percentage of the selling price that is profit ((Price - Cost) / Price). A 20% markup only gives you a 16.7% margin. For a 20% margin, you need a 25% markup.

How much should contractors charge for overhead?

Typical contractor overhead runs 25-54% of revenue. This includes insurance, vehicle costs, office expenses, licensing, tools, marketing, and administrative time. Remodeling contractors typically have higher overhead (35-54%) than new construction (25-35%).

2026 Pricing Guide

Contractor Markup Calculator & Pricing Guide

Stop losing money on jobs. Learn how to calculate markup vs margin, price overhead correctly, and bid profitably.

Markup vs. Margin Calculator

Enter your costs and markup to see what you'll actually make. Learn more about the difference →

Your Total Costs

Materials + labor + subs

Your Markup %

Selling Price$12,500.00

Your Profit$2,500.00

Actual Profit Margin20.0%

Notice: Your 25% markup only gives you 20.0% profit margin. That's a 5.0 percentage point difference!

Quick Reference:

20% margin = 25% markup25% margin = 33% markup30% margin = 43% markup40% margin = 67% markup

⚠️

Common mistake: Many contractors think a 20% markup gives them 20% profit. It doesn't—it gives you 16.7%. To actually make 20% profit margin, you need a 25% markup. This is why so many contractors struggle financially.

What's Included in Overhead?

These costs must be covered by your markup—they're not billed directly to jobs.

🚗 Vehicle & Equipment

• Truck payments/lease
• Gas and maintenance
• Tools and equipment
• Trailer

Typical: 5-10% of revenue

📋 Insurance & Licensing

• General liability insurance
• Workers comp
• Contractor license
• Bonds

Typical: 5-12% of revenue

🏢 Office & Admin

• Office rent/home office
• Phone and internet
• Software subscriptions
• Accounting/bookkeeping

Typical: 3-8% of revenue

📣 Marketing & Sales

• Website and hosting
• Advertising
• Vehicle wraps/signage
• Lead services

Typical: 2-8% of revenue

⏰ Non-Billable Time

• Estimating and bidding
• Client meetings
• Drive time
• Callbacks and warranty

Typical: 10-20% of revenue

💰 Owner Salary & Profit

• Your salary (if not billed)
• Profit margin
• Taxes on profit
• Retirement savings

Target: 8-15% profit

💡

Calculate your actual overhead: Add up all your annual non-job costs and divide by your annual revenue. If you spent $75,000 on overhead and did $250,000 in revenue, your overhead rate is 30%. You need at least 43% markup just to break even.

Recommended Markup by Project Type

Project Type	Typical Markup	Gross Margin	Notes
New home construction	15-25%	13-20%	High volume, lower overhead
Kitchen/bath remodel	35-50%	26-33%	High complexity, more oversight
Room addition	30-45%	23-31%	Multiple trades, permits
Handyman/repairs	50-75%	33-43%	Small jobs, high per-job overhead
Commercial tenant improvement	10-18%	9-15%	Large contracts, competitive
Insurance restoration	10-20%	9-17%	Pricing set by adjusters

Marking Up Subcontractors

Typical GC markup on subs

10-15%

This covers your time coordinating, scheduling, quality control, and liability for their work. Some GCs go higher (20%+) on complex projects requiring heavy oversight.

When to charge more

✓ You're managing permits and inspections for them
✓ High coordination required between trades
✓ You're providing materials they install
✓ Warranty responsibility falls on you

How to Price a Job

Calculate direct costs

Labor (hours × rate) + Materials + Subcontractors + Equipment rental + Permits

Know your overhead rate

Add up annual overhead costs ÷ annual revenue = overhead percentage. Most contractors are 25-50%.

Add your target profit

Healthy profit is 8-15% of selling price. Combined with overhead, this gives your required margin.

Required margin = Overhead % + Profit %
Required markup = Margin ÷ (1 - Margin)

Apply the markup

Selling price = Direct costs × (1 + Markup %)

Example: $10,000 costs × 1.54 (54% markup) = $15,400 price

Generate estimates automatically

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Frequently Asked Questions

What's the difference between markup and margin?

Markup is the percentage you add to your costs to get the selling price. Margin is the percentage of the selling price that is gross profit. They're not the same! A 20% markup only gives you a 16.7% margin. For a 20% margin, you need a 25% markup. This is the #1 reason contractors don't make enough profit—they confuse the two.

How much markup should I charge?

It depends on your overhead. First, calculate your actual overhead percentage (annual overhead costs ÷ annual revenue). Then add your target profit (8-15%). That's your required margin. Convert margin to markup: Markup = Margin ÷ (1 - Margin). Most remodeling contractors need 35-54% markup to be profitable.

Should I mark up materials?

Yes. Materials markup (typically 7-20%) covers your time ordering, picking up, and managing materials, plus carrying costs if you pay before you're paid. Some contractors mark up labor higher and materials lower, but you should mark up both to maintain your overall margin.

How much should I mark up subcontractors?

Typically 10-15% on subcontractor costs. This covers your coordination time, scheduling, quality control, and liability exposure. If you're heavily managing the sub (permits, inspections, materials), charge more. If they're turnkey, you can charge less.