Contractor pricing
Subcontractor Markup Calculator
Contractors often under-mark subcontractor work by adding margin as if it were markup. This tool shows the markup required to cover overhead and hold the margin you want.
Enter subcontractor pricing
Show calculation
Overhead Cost = Subcontractor Cost x Overhead %
Final Price = (Subcontractor Cost + Overhead Cost) / (1 - Margin %)
Required Markup % = (Final Price - Subcontractor Cost) / Subcontractor Cost
Subcontractor numbers are often under-marked because the target margin is added as if it were markup. The two are not the same.
Results
These figures show what the subcontractor line should become before you put it in front of a client.
Required Markup
29.41%
Final Price to Client
$12,941.18
Expected Profit
$1,941.18
To achieve a 15% margin, this requires a 29.41% markup, not 15%.
Subcontractor cost: $10,000.00
Overhead allowance: $1,000.00
Cost before profit: $11,000.00
Target margin: 15%
Markup and margin for subcontractor work
Markup is what you add to the subcontractor invoice. Margin is what remains from the final billed amount after the subcontractor cost and overhead are covered.
If you want a 15% margin on subcontracted work, you cannot simply add 15% to the subcontractor cost. Overhead and the margin calculation both change the required selling price.
Example scenario
A roofing subcontractor quotes $10,000 for a portion of the job.
You carry 10% overhead on subcontracted work.
You want the final billed amount to hold a 15% profit margin.
Required markup: 29.41%
Final price to client: $12,941.18
Expected profit: $1,941.18
Common mistake
Under-marking subcontractor costs
Using the same $10,000 subcontractor cost and 10% overhead, a contractor may add only 15% because the target margin is 15%.
That produces a price of $11,500.00 and a profit of $500.00.
The actual margin is only 4.35%, which is materially below target.
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Keep these numbers tied to every job record.