Most general contractors mark up 10–20% on large new builds and 20–35% on remodels and smaller jobs — or they price cost-plus, charging actual cost plus an agreed fee. That markup is not a bonus on top of subs and materials; it pays for project management, overhead, risk, and the profit that keeps the company alive between jobs.
The reason so many GCs work hard and stay broke is a pricing error: they confuse markup with margin, forget to recover overhead, and bury their fee where they can't see it. Here is how GC pricing actually works, the two models you'll choose between, and how to set rates that cover the business, not just the build.
You quote one number for the whole scope. The client likes the certainty; you carry the risk if costs run over. Fixed price works when the scope is clear and you control the variables. Pad it with a contingency, because on a lump-sum job, every surprise comes out of your margin.
The client pays real cost of labor, materials, and subs, plus your fee — a percentage or a fixed amount. Good for remodels and older homes where hidden conditions blow up fixed bids. Pair it with a not-to-exceed cap so the client feels protected and you still get paid for the work you actually do.
This single mix-up costs contractors more profit than any bad sub. Here's the difference in plain numbers:
Total your annual overhead — everything not tied to a single job.
Divide it by the annual volume of work you realistically do to get your overhead percentage.
Add the profit margin you actually want on top of overhead — not instead of it.
Convert that combined margin into the markup you apply to job cost, and quote from it every time.
The right answer is sometimes no. Walk away — or price it high — when:
A confident, fair price loses a few bargain-hunters and wins the clients who pay on time and refer you. That trade is worth making.
Contractors who can hold their margin are usually the ones clients sought out, not the ones fighting three other bids on price. A site that shows your past builds, your license, real reviews, and an easy way to request a consult lets you compete on trust instead of being the cheapest. We build that, and we run the same setup on our own home-service companies.
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Typically 10–20% on large new builds and 20–35% on remodels and smaller jobs, where overhead per dollar is higher. The markup covers project management, overhead, risk, and profit.
Fixed price when the scope is clear and you control costs. Cost-plus when the scope is uncertain, so you aren't eating change-order risk. Many GCs use cost-plus with a not-to-exceed cap to protect both sides.
Total your annual overhead, divide by your work volume for an overhead percentage, then add your target profit. Convert that combined margin into a markup. Remember a 20% margin needs a 25% markup.
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