# How much do you mark up a subcontractor's work?



## jwatts (Sep 19, 2013)

Do add on a percentage or???


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## Inner10 (Mar 12, 2009)

15-20 percent.


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## sunkist (Apr 27, 2012)

Depends on the job cost I use a sliding scale.
Just make sure it's worth your time to deal with the sub 
The other thing is the subs work it's self how much hand holding or supervision is needed


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## DaVinciRemodel (Oct 7, 2009)

Most times, we pass a subs bill through without any mark-up (we’re usually T&M and make our nut on our time).

There are times we’re fixed price. Sometimes I’ll hit a sub’s bill by as little as 15%. I’ve also hit some by as much as 100%.

I’ve got no hard rules. Sometimes it depends on the customer, my mood, flip of the coin...


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## PCI (Jun 8, 2012)

I'm like DaV, I'll mark it up 100% on some subs on some projects or I'll throw on a "necessary " dollar amount I need to make it worth my while for the project. 

I could say I don't mark any of them up and tack on what I need to make for a project. When going through the numbers, I usually tack on a smaller % and add what I need to make in case I under estimate costs.


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## NJ Contractor (Nov 12, 2016)

All job costs including subs are marked up 50%. We don't baby-sit for free...


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## Golden view (Feb 16, 2012)

NJ Contractor said:


> All job costs including subs are marked up 50%. We don't baby-sit for free...


Man I'd have made an extra million if I could mark up that much.


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## Golden view (Feb 16, 2012)

For me it depends how much management there is, how much my experience, expertise, and reputation contributes to the performance of the sub's work. Some of the best subs aren't available direct to homeowners


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## NJ Contractor (Nov 12, 2016)

Golden view said:


> Man I'd have made an extra million if I could mark up that much.


Sometimes it is still not enough for all the aggravation and incidentals that arise...


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## Golden view (Feb 16, 2012)

NJ Contractor said:


> Sometimes it is still not enough for all the aggravation and incidentals that arise...


Maybe my way's better then. :laughing:

Smaller markup, great subs!


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## NYgutterguy (Mar 3, 2014)

I hope guys jack up their cost to the homeowner as much as they can from my total. 


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## NJ Contractor (Nov 12, 2016)

Golden view said:


> Maybe my way's better then. :laughing:
> 
> Smaller markup, great subs!


Subs are good, houses are old, clients - well they run the gamut :thumbsup:


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## NJ Contractor (Nov 12, 2016)

NYgutterguy said:


> I hope guys jack up their cost to the homeowner as much as they can from my total.


Like salesmen who pay their own commissions


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## GCTony (Oct 26, 2012)

NJ Contractor said:


> All job costs including subs are marked up 50%. We don't baby-sit for free...


If only i could mark up 50% on top of my electricians contract, $185,000 along with the other subs $600K, I would only need to do one job a year. 

We don't mark up subcontracted work. However we have fees stipulated like supervision, project management, project overhead, project profit that covers the baby-sitting part. For our public contracts we can only mark up 5% max on change orders for subcontracted work and we usually can't line item general condition type costs.


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## NJ Contractor (Nov 12, 2016)

GCTony said:


> We don't mark up subcontracted work. However we have fees stipulated like supervision, project management, project overhead, project profit that covers the baby-sitting part.


That is what my markup covers (overhead & profit) and a contingency for old house remodeling...never know what we are going to run into and I don't like to nickel and dime my clients to death while we are working, so we just keep moving.


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## Stunt Carpenter (Dec 31, 2011)

NJ Contractor said:


> That is what my markup covers (overhead & profit) and a contingency for old house remodeling...never know what we are going to run into and I don't like to nickel and dime my clients to death while we are working, so we just keep moving.




I take a similar approach. There should be some buffer on subs work just in case there are slight problems. I can’t get anywhere near 50% ok subs I’m 15-20% except my drywall guy is 25% because he needs more baby sitting and is a talker.


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## Fouthgeneration (Jan 7, 2014)

Any GC that is adding 50-100% is just teaching Subs to be General contractors to get a "fair" piece of Pie...

I'd get an outside opinion re: if your subs are truly subs regarding the IRS... 

100 % markup = RED FLAG

The Federal IRS actually has an easy to understand test regarding Subs Vs. employees you need to be withholding taxes and paying mandate hourly payroll premiums like WC, etc..FCIA FUTA.... 

I hope the OPers Subs plow them under with = quality work at 75% cost levels.....

Can't see it ever withstanding a true 'Free' marketplace of GC's and Subs with informational transparency..... : If my GC marked my bills up 100% I'd under bidding them next month ......

Only in a Gold rush situation would margins like that make sense, Are you in some Nanny State with Huge barriers to getting G C licences? Or in a Mobbed up area like NYC?


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## NJ Contractor (Nov 12, 2016)

Fouthgeneration said:


> Any GC that is adding 50-100% is just teaching Subs to be General contractors to get a "fair" piece of Pie...
> 
> I'd get an outside opinion re: if your subs are truly subs regarding the IRS...
> 
> ...


huh??

It's a free market and a contractor can markup a project any amount that the market will bear. All projects should be estimated using fully burdened in-house labor costs + materials costs + subcontractor costs. Then one should add either a fixed cost or markup to cover overhead & profit. I am not sure what employee vs. sub has to do with our discussion as that is a different issue.


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## Jaws (Dec 20, 2010)

Fouthgeneration said:


> Any GC that is adding 50-100% is just teaching Subs to be General contractors to get a "fair" piece of Pie...
> 
> I'd get an outside opinion re: if your subs are truly subs regarding the IRS...
> 
> ...


Remodeling magazine recommends 40-67% mark ups on renovations. 

I cant imagine foing a bathroom for less than 50% mark up, too much involved in a small (under 50k ) dollar amount

I expect a 28-30% gpm from renovations, including whole house Reno's. Mine isnt straight mark up unfortunately- Mine is more like 18-40% mark up depending on new construction or remodel, how big, etc..., so 15.38% gpm to 28.57% gpm, plus I make a modest GP on my inhouse employees (i.e I pay 25.00, their burden in 11 and I charge 45.00, so we gross 9 past employee burden), I make money on anything built in the shop, trash (I won my own dumpsters), I charge for supervision, design, selections manager etc... so it brings it up to as high as 40% gpm, and as low as 23% gpm on big stuff

You must also keep in mind that models are different. A gc with no inhouse personell doesnt need to get the same gpm as an outfit taking more risk, doing more work and keeping it in house like I am. Doesnt mean I net more, a good year 10-11%, a bad year 4%.... after a reasonable salary. I am paying for a shop, office, office staff, 9 trucks, equipment, a dozen employees or more etc.. vs that one man shop

It's a mistake to think you are hiring cheap subs with my model. My Mason is a millionaire most likely in his 30s, he gets 10 bucks a foot for limestone and 8.25 for full 1 1/8 stucco. Hes not cheap for this area by any means. I think many of my subs have a much better deal than me and less time invested in many cases. My AC contractor makes 20k a month probably with 2 crews and works about half a day. His overhead is lower, and he has one trade to know 

I expect to be in the top 5% of my market for pricing


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## Jaws (Dec 20, 2010)

Btw I'm in texas. My 9 year old could throw a sign on her bike and say I'm a builder lol


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## Jaws (Dec 20, 2010)

NJ Contractor said:


> That's why I don't do small projects or time & material work. There is no meat on the bone given all the competition shuffling to get the work and lowering their costs.
> 
> 
> 
> In this business you make your money from the larger projects and the markup on subs, materials, employees, design work, dumpsters, etc...kind of like a hedge fund where maybe the bathroom is not making much money but you are making money say on the kitchen or another aspect of the project to make up for it.


I think a small project remodeler can make great money if they are set up for it, are talented and effecient. Also need to be a good salesman because it cant be for market price


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## NJ Contractor (Nov 12, 2016)

Jaws said:


> I think a small project remodeler can make great money if they are set up for it, are talented and effecient. Also need to be a good salesman because it cant be for market price


And you have to be willing to bust your ass doing the work and all that comes along with running the business. I think you'd be better off getting employment with a larger outfit that pays $30+ per hour with benefits and go home at the end of the day without all the headaches.


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## Tom M (Jan 3, 2007)

Small jobs are very profitable for me with low stress but you need a lot of them to average out.

Bigger jobs, you're stuck there and things can go south fast with more stress. They make better money because you're getting your over time so to speak as a manager with a markup as well as in-house carpentry.

I have tried putting a management fee on top of a markup on jobs where there was low in house carpentry and that was a problem. 

It really depends on what's coming at you and who else your bidding against that you're aware of.


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## Jaws (Dec 20, 2010)

NJ Contractor said:


> And you have to be willing to bust your ass doing the work and all that comes along with running the business. I think you'd be better off getting employment with a larger outfit that pays $30+ per hour with benefits and go home at the end of the day without all the headaches.


Picking 10 of the last 50k or so projects I have done I think I could pay myself 1200 - 1500 a week, pay for my truck, insurance and 750 a month for a shop space, 10% net. Hands off, just selling, coordinating, running materials, etc... and be off basically 4 weeks out of the year 

Basing off of 600k net revenue for the year 

Part of that is being choosy as hell, I could give way 90% of my leads if I just wanted to sell 600k

Smaller the job the earlier it is to get that mark up too

Also would have to be in an affluent area and doing top of the line work


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## Tom M (Jan 3, 2007)

I shouldn't say small jobs are low stress because nothing is these days too much product and low-quality can turn the smallest job into a hassle


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## NJ Contractor (Nov 12, 2016)

Jaws said:


> Picking 10 of the last 50k or so projects I have done I think I could pay myself 1200 - 1500 a week, pay for my truck, insurance and 750 a month for a shop space, 10% net. Hands off, just selling, coordinating, running materials, etc... and be off basically 4 weeks out of the year
> 
> Basing off of 600k net revenue for the year
> 
> ...


What would your employee situation look like in this scenario?


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## Jaws (Dec 20, 2010)

NJ Contractor said:


> What would your employee situation look like in this scenario?


None


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## NJ Contractor (Nov 12, 2016)

Jaws said:


> None


Would be a lot of running and cat herding but doable :thumbsup: 

Better to do 1 $1m project than 20 $50k projects though.


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## Jaws (Dec 20, 2010)

NJ Contractor said:


> Would be a lot of cat herding but doable


Yeah I still wouldnt go that route, when I get to where i dont need or want the money that bad and get tired of this operation I might go to building 2 projects a year, one at a time out of my house. New construction or major renovation. Probably the same money but less headaches


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## NYgutterguy (Mar 3, 2014)

NJ Contractor said:


> I was just with my accountant this morning discussing this and he said most of his contractor clients are clueless when it comes to their true costs. They call him in a panic once they realize they have to borrow money to keep the business afloat.




I’m of these clueless guys and reading some of this make me dizzy . . I just know I make about 25-30% of gross sales. 

Take a decent salary every month regardless of sales. Don’t know my true numbers like most on here. Something I want to learn more about in the year ahead. 

Where I differ from the real clueless guys is I keep between 40-45k In my company savings account at all times and I’ve never been broke lol. 


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## NJ Contractor (Nov 12, 2016)

NYgutterguy said:


> I just know I make about 25-30% of gross sales.


That's all you need to know! Don't overcomplicate things.

But seriously; it's good to see how the inflows and outflows work to form your business and where you can improve things.


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## Tom M (Jan 3, 2007)

A local builder pushing 90 still buys property and knocks down and rebuilds new homes. Maybe 4 a year pending on how low he gets the distressed property for.

Used him a pricing coach a large addition/remodel some years back. Got beat by almost a hundred grand and the owner was a past customer friendly with two of my subs. I was his preference.

Bottom line is the numbers don't lie but like the cops we rag on, This old builder I know doesn't need the money and has a stream coming in. You can't compete with other people's hobby money.


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## NJ Contractor (Nov 12, 2016)

Tom M said:


> A local builder pushing 90 still buys property and knocks down and rebuilds new homes. Maybe 4 a year pending on how low he gets the distressed property for.
> 
> Used him a pricing coach a large addition/remodel some years back. Got beat by almost a hundred grand and the owner was a past customer friendly with two of my subs. I was his preference.
> 
> Bottom line is the numbers don't lie but like the cops we rag on, This old builder I know doesn't need the money and has a stream coming in. You can't compete with other people's hobby money.


:confused1: Did you bid against the 90 year old or did he help you assemble your bid? 

And how many bidders were there besides you?


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## Tom M (Jan 3, 2007)

It was about 12 yrs ago. He helped proof my bid. Yeah I know....new work and old is very different.

Don't know about other bidders other than the "architects guy". Lost too many being a price check for that too. Live and learn.
Point stands for hobby money though


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## Tom M (Jan 3, 2007)

Theres a connection with the accountant so the thread made me think about that.


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## NJ Contractor (Nov 12, 2016)

Tom M said:


> It was about 12 yrs ago. He helped proof my bid. Yeah I know....new work and old is very different.
> 
> Don't know about other bidders other than the "architects guy". Lost too many being a price check for that too. Live and learn.
> Point stands for hobby money though


It's unlikely you were $100k off. How big $ wise was the project? Is the winner still in business? Sometimes the best projects are the ones you don't get.


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## Tom M (Jan 3, 2007)

Have no idea if still around. Job for me was around $380

It's always a game pricing per plan or pricing per conversation. And then the owner telling everyone something different.


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## NJ Contractor (Nov 12, 2016)

Tom M said:


> Have no idea if still around. Job for me was around $380
> 
> It's always a game pricing per plan or pricing per conversation. And then the owner telling everyone something different.


Probably better off. I always ball park based on sf costs. If the owner is serious we move onto the next step and get them to commit some dollars to the design/estimating process. 

If they have construction documents and drawings in hand then that's a different story and one has to decide if it is worth the time putting together a bid. An awarded bid usually means you are the one willing to do it for the least amount of money. Again, a race to the bottom...


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## builditguy (Nov 10, 2013)

I didn't read the replies.

In my case, I mark up 10%. Most of my sub-contractors are below the $100,000 mark. If it were higher than that, I may lower my percentage.

People (customers) don't realize how much time is involved with a sub. Then, I am responsible for them and their work. If there is an issue, I may call them back, but the customer looks at me first.


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## NJ Contractor (Nov 12, 2016)

builditguy said:


> In my case, I mark up 10%.


10% is low. I hope you are charging more $ elsewhere for your time, overhead & profit.


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