When you ask a contractor for an estimate, it usually includes the direct costs of construction plus a markup charged on some or all of those expenses. This is true whether you have a time-and-materials estimate or a fixed-price one, also known as a bid.
Ranging from 10 to 30 percent or possibly more, markups are often loosely described as covering overhead and profit, although they cover a wide range of costs that contractors incur while doing business. Be assured that whether you see that markup clearly or it is included in other costs, it is in there somewhere, because if it isn’t, your contractor can’t be solvent.
What kinds of overhead costs are you paying for through these fees, and how do those benefit homeowners as well as contractors? Here‘s a short list, which may vary by company and the state and county in which they operate. [Learn More…]