What Markup Strategies Maximize Contractor Profitability? 

P.S: free markup calculator included below! 

Why include markup?

We commonly see questions like these from contractors who are just entering the business: 

"What is markup?" "Why is it important?" "How much markup do I add?"

As a remodeler, it’s important to set a markup percentage so you can make a profit, rather than just break even.  

Markup is the amount / percentage you add on top of your project costs to cover your business expenses (i.e. insurance, utilities, equipment, office wages), as well as make a profit on your job. 

Cost vs. Selling Price

First, it’s important to understand cost vs. price. 

Costs are the total expenses to perform the work in your project. This includes things like materials, labor, permit costs, inspections, temporary needs, and any other direct costs involved in completing your job.  

The selling price, on the other hand, is the amount your customer pays you for completing the job. This includes the costs of the project itself, plus a markup (which covers your profit and other expenses). 

Clear Estimates makes this process simple by offering accurate, up to date and locally sourced material & labor costs - so you can estimate the actual costs to perform the work. 

Then, your markup percentage can easily be applied on top of your project costs. 

So, how do I calculate my markup?

While figuring out a markup percentage might seem simple, it requires precision to ensure you make a profit.  

In general, you’ll need some numbers to get started:

• Projected annual sales 
• Target take home percentage for owners
• Precise figures on overhead expenses, including: 
• Rent
• Office wages
• Vehicle & equipment costs
• Legal and accounting 
• Insurance costs 
• Any other business related expenses

We highly recommend our webinar from Michael Stone (author of Markup & Profit: A Contractor’s Guide, markupandprofit.com) on best practices when setting your markup. 

Michael has more than five decades of experience in the building and remodeling industry, and explains in depth how to calculate the correct markup for your business. He also discusses common mistakes when calculating and applying markup.

Watch the full webinar here: Calculating Your Markup with Michael Stone

Clear Estimates Markup Calculator 

You can take the legwork out of calculating your markup with Clear Estimates’ free and convenient markup calculator! This calculator suggests a markup percentage based on your company’s projected sales and overhead.

To download the calculator, head to the link below and enter your name and email. You’ll receive an email to download your free & convenient calculator right away!

‍Get Your Free Markup Calculator Now!

Estimate Project Costs Accurately

Markup only makes a difference when your actual project costs are accurate. It can be tough to accurately estimate your project under ever changing market conditions, but that's where Clear Estimates comes in handy.

Here’s how we can help:

• 300+ powerful project templates built to save time and avoid errors

• 12,000+ locally sourced material & labor costs updated quarterly, so you can estimate accurately 

• Powerful features & integrations to help you focus on growing your business

Start a free trial of Clear Estimates below, and make 2025 the year you start estimating with confidence.

Start 30 days of free estimating!

Armed with your markup calculator and Clear Estimates’ detailed library of remodeling costs, staying profitable is easier than ever!