How to price a construction job
Every profitable bid comes down to the same five ingredients. Get honest numbers for each and the price defends itself:
- Labor — with burden. Crew hours times the wage is not what labor costs you. Payroll taxes, workers' comp, liability insurance, and benefits add 25–50% on top of the paycheck. Bidding bare wages is the fastest way to lose money on a job that "should have" made it.
- Materials — with waste. The delivered price, plus an allowance for offcuts, breakage, and mistakes. If you use 8% more lumber than the takeoff says, you're buying 8% more than you bill for unless it's in the bid.
- Subcontractors, equipment, and fees. Sub quotes at their price to you, rentals and fuel, permits, inspections, and the dumpster. These are real job costs even when they don't feel like "your" work.
- Overhead. The truck, the insurance policy, the phone, the estimates you don't win — the business costs money whether or not this job exists. Recover it as a percentage of direct cost (10–15% is typical) so every job carries its share.
- Margin. Applied to the price, not the cost. A 20% margin means cost ÷ 0.80 — not cost × 1.2. Confusing the two quietly gives away profit on every bid.
What's a typical contractor markup?
Remodelers and general contractors commonly run total markups of 35–65% over direct job cost once overhead and profit are both counted — which sounds high until you see where it goes. A "50% markup" on a healthy remodel might be 15% overhead recovery and a 20–23% true profit margin. Specialty trades with low material content often run higher. The number that matters isn't what the contractor down the road charges — it's your overhead and your target margin, computed in the right direction.
Frequently asked questions
Is this calculator really free?
Yes. It runs entirely in your browser — nothing you type is sent to a server, stored, or shared. Your inputs are saved locally on your own device so they're still there next visit.
What's the difference between margin and markup?
Markup is a percentage added on top of cost; margin is the percentage of the final price that is profit. A 20% markup on $10,000 of cost gives a $12,000 bid (16.7% margin). A 20% margin on $10,000 of cost gives a $12,500 bid. This calculator uses margin, because that's how profitability is actually measured.
What should my overhead percentage be?
Add up a year of business costs that aren't tied to any one job — vehicles, insurance, office, phone, software, advertising, your unbillable time — and divide by a year of direct job costs. Most small contractors land between 10% and 20%. If you've never done that math, 12–15% is a safer starting point than zero, which is what leaving it out means.
Should I bid fixed-price or time and materials?
Customers strongly prefer a fixed price, and fixed pricing rewards contractors who estimate well. Build the bid from your hourly and unit numbers internally (like this calculator does), then present one number — it's easier to say yes to, and it doesn't invite negotiation over your wage rates.