Itemized Markup in Estimates

How should I show markup, in a construction project estimate?

Goldenseal estimating software isn't particular about how you handle markup on your estimates. You can use a single markup amount, or you can break it up into smaller components.

NOTE-- Click the link for more details, on how you can set up markup amounts to cover overhead and profit.

Single Markup

Some people use a single markup percentage, to cover all "soft costs" such as overhead, profit, contingencies and inflation. It is simple, and you can use a suggested "rule of thumb" markup percentage as mentioned in business books and classes.

After you have entered hard costs, follow these steps to enter a single markup percentage:

1. Click in the bottom row, and press the Return key or Enter key to add a new row.
2. Enter Percent of Total or Percent of Hard in the Cost Area column.
3. Type a brief description into the Cost Item column.
4. Enter the markup percentage into the Quantity column.
5. Goldenseal will automatically calculate the dollar amount.

NOTE-- Use Percent of Total if you use a retail markup percentage (based on the final price including markup). In that case, a project with $100 of hard costs and 25% markup will charge out at $133.33. Use Percent of Hard if you want to add a simple percentage to your hard costs. In that case, a project with $100 of hard costs and 25% markup will charge out at $125.

If you use a single markup percentage, you'll probably want to hide overhead in the printed forms that you give to the customer.

Multiple Line Items

Many people find the markup calculation to be more understandable if it is broken up into its components. You can include any or all of the following items:

• Overhead-- a percentage to cover advertising, insurance, office rent, truck expenses and other general costs that don't apply to a specific project.
• Profit-- money that you take home in addition to wages, to cover your risk and investment.
• Contingencies-- an amount that covers mistakes, problems, and unexpected changes.
• Supervision-- an amount to cover general supervision time that is hard to measure.
• Inflation-- an allowance to cover price increases between when you estimate, and when you pay staff or buy materials.

To add multiple markup items, follow these steps:

1. Click in the bottom row, and press the Return key or Enter key to add a new row.
2. Enter Percent of Total or Percent of Hard in the Cost Area column.
3. Choose a category.
4. Type a brief description into the Cost Item column.
5. Enter the markup percentage into the Quantity column.
6. Goldenseal will automatically calculate the dollar amount.
7. Repeat steps 2 to 6 for each additional line item.

HINT-- Using multiple markup items is especially helpful if you print "open book" estimates, and show your markup percentages. Using many small percentages is less scary than one big one!

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