Job Profit or Markup %

[mcpritt]

What is the typical markup everyone is charging for jobs of varying sizes? Should you step your markup down as your job gets bigger. For example: job less than $30,000 = 30% markup, a job $30,001 - $50,000 = 20%, $50,001 - $80,000 = 10% and $80,001+ = 5%

Does anyone do this and what are your typical numbers?

Thanks,
MCP

 

[petersonra]

Re: Job Profit or Markup %

I think you may well find that it's not so much the size of the job as the type of job that determines what you can charge.

If there is a lot of competition, that would tend to reduce your profit margins.

On really large jobs, the big guys will take them at what amounts to break even levels because it pays for the overhead, giving them more latitiude on other projects.

 

[short circuit faulted]

Re: Job Profit or Markup %

In attempting to study failed post bid results, I have come to believe many electrical contractors when quoting work fail to account for overhead costs. IE They look at the same set of plans and specifications that I have and "hopefully" have prepared an estimate base on the plans and specifications (I must admit, I have "inspected" jobs with drive-by that had schedule 40 gray colored galvanized rigid conduit, I must assume that they went above the specification for GRS and provided Coated GRS, SURE they did!) I wander as truly my point is to cover overhead (whatever it may be) as percentage mark-up and then use your profit markup. The profit markup will have to depend on A. Realistically what you need to make to continue in bussiness B. Shaded by past experiences with the same type of work and competetion. C. The work itself, IE Airport duct bank with permits and specific times the work can be done versus same duct bank (insert work type) done where there are no problems. D. The general contractor or construction manager you are doing the work for. (Will they work with you or against you) In a bid market the size of the job has little or nothing to do with percentage markup, in a "service work" senario the markup should be not less than 60 percent of cost of labor and 30 percent cost of materials.

Have a good day!

Steve

 

[hardworkingstiff]

Re: Job Profit or Markup %

Originally posted by mcpritt:
What is the typical markup everyone is charging for jobs of varying sizes? Should you step your markup down as your job gets bigger.
MCP

Overhead is actually a dynamic % of sales.

If you have one large job for $1,000,000 you have everyone showing up at the same time at the same place with a continuity on the work day. If you have a good supervisor that can plan well and motivate the employees, your overhead as a % of sales will go down as compared to the next paragraph.

Now let's say you have 20 $50,000 jobs to perform in the same time frame as the 1 $1 mil job. You must organize for 20 jobs instead of 1 (that means more top end people, probably by a factor of 2 or 3). These top end people usually do not generate the same revenue per hour paid as do the electrician and helper in the field. The field people travel between jobs more and therefore need nonproductive time to "get up to speed". Someone had to sell the jobs (takes more paid effort to sell 20 small jobs than 1 large job). There is just generally more "overhead" work to 20 small jobs rather than 1 large job. I'm sure you can think of quite a few more examples of why.

My answer to your question is "yes", you should lower your markup on larger jobs as compared to smaller jobs.