Markup and pricing

Markup is the difference between what materials cost you and what you bill the customer. Set it once in the price book, apply it consistently across every job. Markup is also where most small contractors quietly lose money — discounting it case-by-case adds up to a 10-15% margin loss per year.

Default markup

Settings → Price book → Default markup. Most contractors set this at 15–25% on materials and 25–40% on labor. Don't apologize for it — markup is what covers your overhead and risk. Labor markup specifically should cover the burden (payroll taxes, workers' comp, insurance, equipment time) plus profit.

If you're not sure where to start, 20% on materials and 35% on labor is a defensible default for residential remodel work. Service trades typically run higher (30-40% material, 50-60% labor). Adjust based on your competitive position and overhead.

Per-item overrides

Some items (lumber, drywall, copper) move so much you want a per-item markup that tracks the commodity. Set it on the price book entry; it overrides the default. Copper pipe at 12% markup makes sense; setting it at 25% prices you out of plumbing bids.

Other items (specialty hardware, custom millwork, anything special-ordered) deserve higher markup because of the time you spend sourcing them. 40-50% on items you have to call three vendors to find is fair.

Per-job overrides

On a high-end remodel, you might run higher markup. On a referral repair from your best customer, you might run lower. Override on the estimate line — the default reverts on the next job. The per-job override is for that specific bid, not a permanent change.

When to raise your markup

If you're winning every bid, your markup is too low. If you're losing every bid, it's too high. Aim for a 50-60% win rate — that's the sign your pricing is calibrated to what the market will bear. Below 30% win rate, drop markup. Above 70%, raise it.

Don't be afraid to raise markup. Most small contractors are 10-15% below market. The customers who would have hired you anyway still will; the price-shoppers who pushed back on a low number will keep pushing back at any number.

Markup vs margin (the math)

Markup and margin are not the same. 25% markup is a 20% margin. 50% markup is a 33% margin. 100% markup is a 50% margin. When talking to your accountant or a business partner about pricing, be explicit about which one you mean. Construction Scope labels the field 'markup' because that's how contractors talk about it in the field, but the dashboard report uses 'margin' for the percentage of revenue retained after costs.