Markup Vs. Margin In Construction Pricing
The confusion between “Markup” and “Margin” is one of the leading causes of bankruptcy in the construction industry. Many talented contractors finish a project believing they made a 20% profit, only to realize after the bills are paid that they actually made less than 10%. This error happens because they apply a “Markup” percentage to their…
Fixed-price Vs. Cost-plus Construction Contracts
Choosing the right “Contract Type” is a fundamental strategic decision for any construction project. The contract determines who carries the “Risk”—the contractor or the client. The two most common models are “Fixed-Price” (Lump Sum) and “Cost-Plus” (Time and Materials). Each has significant implications for your profit margins…
How To Price Construction Services For Profit
Pricing is the most critical decision in your business. If you price too low, you are “Paying to Work.” If you price too high without justifying your value, you have no work. Most contractors price based on “What the guy down the street is charging” or a “Gut Feeling.” This is the fastest way to stay small and broke. To build a successful…