What Should I Be Making?

Maderan

This is my first year as a general and I want to make sure I am being fair to myself and my customers. We are working on renovations only right now and my partner and I do no labor on our jobs (besides delivering materials)and have been making around 10,000-15,000 (P and O) on interior renovations (20% markup material and 25% labor). Complete interior renovations avg contract is 90,000 to 120,000. We are just about to get a couple of new construction contracts and we might lower our margins for those. We don't put mark-ups on anything we sub out (plumbing, elec, HVAC) or on big ticket items (appliances, cabinets, countertops).

Are we at or above what is reasonable for the industry? Any suggestions for how we should opperate? How are you guys opperating?

We also have a WC rate of 47% of labor which makes us a higher bidder in most cases. Does anyone have experieces with trade organizations (HBA etc.) that have lowered their WC rates by going through the organizations insurance?

Any help I can get would be appreciated. We are in New Orleans and have more business than I can shake a stick at but I want to be sure I am being fair to myself and my clients.

Glasshousebltr

Thats a trick question.

If you provide product for x amount and the customer agrees to pay.....how can that not be fair.

Some of us have more overhead, some of us have ex-wives who can't seem to keep thier hands out of our pockets, so it costs some of us more to live and operate.

Bob

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Bob

jmic

I don't understand why you wouldn't charge profit and overhead for all the work you sub out. If that money is going through your books it's costing you money, which is coming from other profits you could be making. Not that you have to take advantage of anyone but be fair to yourselves, especially if there's all the work you say there is.

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Joe

Maderan

We aren't charging mark-up on sub work because our WC is so high that I think I would price myself out of the job. Subs are very expensive down here right now (rewire entire 2000 sq ft home is $15,000 to 17,000; plumbing is about 11,000 a job to bring everything up to code and replace the line with copper and PVC; HVAC is around 8,000 to replace the system and that is 3 ton min sear). That's why I am trying to find a way to lower my WC, so I can put a mark up on sub work.

And there is an abundance of work here, obviously. If I could get reliable workers and supers then the sky would be the limit.

hatchet

Your markup should be figured for the annual expected volume with consideration for what you want for profit and what you NEED for overhead costs.
Nobody has the same costs it needs to figured for your company.. not mine. I'm working on an article right now on how to figure markup and sales costs of projects. As soon as I get it done Nathan will post it.
If you do remodels and new construction - I would suggest keeping seperate books and figuring the markup seperately also. There is quite a bit more overhead costs in remodeling than there is in new construction.

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Rich
WIT Construction Co.
Superior MT Contractor

dougchips

As a gc you should make some money off of your subs, if not you are providing a service for free. You schedule and deal with head aches when they don't show or leave a mess.....sell the value of you gc services to your customers.
#2 If you closing rate exceeds your goals then your price can not be too high.

#3. Mark-up on material, sell the value of you providing the material and accepting responsibility for it being correct, your pick up/inspection and delivery time.

We all love to preach, my 2 cents.

Patty

You're a Goofball, Boberino!

Shellbuilder

The standard mark up in the remodeling industry is 50% or 1.5 ....and that is above almost all overhead. In other words if you have a 15.00 per hour man and all his overheads including 47% w.c. and other garbage we all paym then his job cost would be around 28.00 per hour. Read Walt Stoppleworth Home Tech books before you go out of business. And for God's sakes markup your sub's work!!

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www.shelladditions.com

jensenconstruction

If you need help on this subject you should take a look at the book
Markup & Profit a Contractors Guide by Michael Stone it can be found at www.markupandprofit.com it helped me out a lot when I was getting started.

Teetorbilt

jensen, I was hoping that you were a neighbor but you're 3K+ miles away.

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jensenconstruction

No such luck, we actualy considered relocating to Florida but I'm pretty well established here and just didn't feel like starting over