5% to 25%
You will have a bid or negotiated contract that will include a percentage for the contractor’s overhead and profit. If you have requested a cost breakdown from your contractor you will likely see a percentage for their markup or profit. These items are essential to completion of the work but not part of the scope of work illustrated in the contract documents. Your contractor’s overhead portion of the markup will be a percentage of the overall cost of your work – let’s say 10% as an example. He may add another 5% as a fee for a total markup of 15% It is the amount a business charges above their direct cost. If your contractor has a 1.50 markup (which is reasonable for a remodeling contractor), that means that if the estimated cost for a job is $10,000, they'll multiply the $10,000 x 1.50 and arrive at a $15,000 sales price. Your contractor gets $5,000 to pay their overhead expenses (which includes salary) and make a reasonable profit. I just heard those same people say, But wait, contractors don't have any overhead!. Guess again. Quote: Originally Posted by Luvbug. I am receiving bids from general contractors for a custom home I am building in the Sacramento, CA area and have a question. In addition to profit and overhead, is it common for general contractors to add a fee percentage to the bids that the sub-contractors submit for the project. General Contractor fees. One of my friends who is a custom home builder charges cost + 15% and homeowner sees all invoices. This way if the homeowner makes changes it does not have a negative effect the GCs bottom line. Construction overhead costs are basically a percentage of the general contractor’s operating expenses charged to your project. These (indirect) costs are not necessarily related specifically to your project but rather their cost of doing business. These items are essential to completion of the work but not part of the scope of work illustrated in the contract documents. Your contractor’s overhead portion of the markup will be a percentage of the overall cost of your work – let’s say 10% as an example. He may add another 5% as a fee for a total markup of 15% General Contractor fees. Yes it is typical for the GC to mark up subs bids as well as materials. Most GC's work on a profit margin of 10% to 15%. In addition to this you may also expect to pay construction management fees. Usually projects like yours are done on a fixed cost turnkey basis. General Contractor fees. One of my friends who is a custom home builder charges cost + 15% and homeowner sees all invoices. This way if the homeowner makes changes it does not have a negative effect the GCs bottom line. The typical remodeling contractor will have overhead expenses ranging from 25% to 54% of their revenue – that means every $15,000 job could have overhead expenses of $3,750 to $8,100. Somewhere along the line, people started believing that a 10% overhead and 10% profit is the industry standard for construction jobs. Your contractor gets $5,000 to pay their overhead expenses (which includes salary) and make a reasonable profit. I just heard those same people say, But wait, contractors don't have any overhead!. Guess again. G eneral contractors are project overseers and they typically bring together the people needed to complete a job. They hire each sub-contractor and add a mark-up percentage to the sub-contractor's cost. Many general contractors also have their own crew of laborers, for which they charge an hourly rate. Typically the contractor' s crew will be general carpentry trades people, some who may have more specialized skills. Exactly how a general contractor charges for a project depends on the type of contract you agree to. There are three common types of cost contracts, fixed price, time & materials and cost plus a fee. Each contract type has pros and cons for both the consumer and for the contractor. So, how much does a contractor cost, anywhere from 5% to 25% of the total project cost, with the average ranging 10-15%. Exactly how a general contractor charges for a project depends on the type of contract you agree to. There are three common types of cost contracts, fixed price, time & materials and cost plus a fee. Each contract type has pros and cons for both the consumer and for the contractor. A Cost Plus Fee contract with a contractor is exactly what it sounds like – the actual cost to build your project plus a management and coordination fee for the general contractor. Imagine that you are installing 100 outlets in your house and the fee to install them is $8,000. Most of the time if you come in and add another 10 outlets you’ll still only pay the $8,000 and not an additional $1,250 for 10 outlets at $125 per outlet.
http://succeedwithcontractors.com/contractor-markup/ http://www.markupandprofit.com/blog/how-much-should-contractor-charge http://www.diychatroom.com/f39/general-contractor-fees-1655/ http://succeedwithcontractors.com/contractor-markup/ http://www.diychatroom.com/f39/general-contractor-fees-1655/ http://www.markupandprofit.com/blog/how-much-should-contractor-charge http://www.acmehowto.com/contractor/how-much.php http://www.acmehowto.com/contractor/how-much.php http://www.lifeofanarchitect.com/residential-construction-contracts-cost-plus-fee/
average general contractor fee percentage