Guide · Contractor markup
How much should a general contractor charge? A markup guide for remodelers
This is the contractor's side of the question: the contractor markup that pays for the job, the company and a profit. It uses NAHB's latest numbers for remodelers, the markup and margin math, and four ways contractors price a remodel.
By Ali Kashif, who runs Booked Remodelers · 26 October 2026 · About 9 minutes
How much should a general contractor charge?
Enough to cover the job's direct cost, a share of what it costs to run the company, and a profit. For remodelers, NAHB's latest study puts the average gross margin at 29.9% and net profit at 6.3% of revenue, from 2024 data. They're averages to check your own numbers against.
Search this question and half the answers are written for homeowners, with hourly rates and a percentage of the project. This one is for the contractor setting the price. The figures come from NAHB's Remodelers' Cost of Doing Business study, published in April 2026, where 6.3% was the highest net profit for remodelers since 1996.
- Direct job costabout $18,320 · 70.1%
- Running the companyabout $6,170 · 23.6%
- Net profitabout $1,650 · 6.3%
- The price$26,138 · 100%
The national midrange bathroom remodel from Cost vs Value 2025, split at NAHB's 2024 averages for remodelers (29.9% gross margin, 6.3% net profit). An illustration of the averages, not anyone's real job. Rounded.
On a $26,000 bathroom, the average remodeler keeps about $1,650. One job that goes sideways, or one bid priced from a margin you don't really have, can wipe that out.
Markup vs margin: the difference that eats your profit
Markup is what you add on top of your cost. Margin is the share of the price you keep. A 30% markup on $10,000 of cost makes a $13,000 price, which is a 23% margin. To keep a 30% margin, you have to mark up about 43%.
A 30% markup $13,000 price
The $3,000 is 30% of the cost, but only 23% of the price.
A 30% margin $14,286 price
$10,000 ÷ 0.7 = $14,286. The $4,286 is 30% of the price, a markup of about 43%.
| The margin you want | Markup on cost | $10,000 of job cost becomes |
|---|---|---|
| 20% | 25% | $12,500 |
| 25% | 33% | $13,333 |
| 29.9% (the remodeler average) | 43% | $14,265 |
| 35% | 54% | $15,385 |
| 40% | 67% | $16,667 |
Markup = margin ÷ (1 minus margin). Rounded.
Or skip the markup and price straight from the margin: divide your cost by one minus the margin. For a 30% margin on $10,000 of cost, that's $10,000 ÷ 0.7, about $14,286. Our free estimate template does that division for you, and shows what adding on top instead would have cost.
Is 10% overhead and 10% profit enough?
Not for the average remodeler. Ten and ten on cost is a 21% markup, which leaves about a 17% gross margin. In NAHB's numbers the gap between remodelers' gross margin and net profit is roughly 24 points, so a 17% margin would leave the average company short before it earned a dollar.
It sounds safe because both numbers are round. But the 10% is taken on cost, while overhead gets paid out of the price. Run the company on 24 cents of every dollar, price at a 17% margin, and you lose about 6 cents on every dollar you bill.
Your overhead may be lower than average. A one‑truck remodeler working from home can run far leaner than a design‑build firm with a showroom, so price from your own overhead percentage.
Four ways contractors price a remodel, and where each breaks
These come from a remodeler pricing a master bathroom on YouTube and the contractors in its comments. Each one works for somebody, and each one loses the profit on some jobs.
1 A lump sum from experience
Price each line from memory of the same job. The Handyman Business, pricing a master bath: "I know from experience that that's $3,000."
Where it breaks On a job you haven't done before, when costs move faster than your memory, and when you never check the estimate against what the job really cost.
2 A day rate
Days on site times your rate. One commenter: "I normally pay my self $600 to $700 a day," labor only, the homeowner buys the materials.
Where it breaks When the job runs long, and whenever the rate covers your time but not the truck, the insurance and the office.
3 A multiple of materials
Price the materials, then build the price from them. One commenter doubles the material cost and adds 20%, so $2,000 of materials becomes a $4,800 job.
Where it breaks When the homeowner buys the finishes, and on labor‑heavy work like demo and tile setting, where the materials cost little.
4 Unit costs from a book
A price per square foot or per item for every task, from a cost book like RSMeans. The Handyman Business used it for years on commercial bids: "there is a price per foot for installation" of everything.
Where it breaks On remodels, where the house never matches the book. A commenter whose contractor prices this way: "That system never works well for remodels."
Whichever method you use, check its answer against the markup table. If the method says $12,000 and your costs say you need $14,286 for a 30% margin, the method is wrong for that job.
The method says $12,000
Your costs need $14,286
The hatched $2,286 is the gap: $14,286 minus $12,000, and it comes out of your margin.
How to work out your overhead percentage
Add up a year of the costs that don't belong to any one job: the office, vehicles, insurance, phones, software, marketing, accounting and a fair wage for your own time. Divide by a year of revenue. That percentage is the floor your margin has to clear before you make a dollar of profit.
Here's the math for one remodeler who wants to net 10%.
| Revenue a year | $1,000,000 |
|---|---|
| Running the company | $240,000, so overhead is 24% |
| Gross margin needed to net 10% | 24% + 10% = 34% |
| Markup on job costs | about 52% |
| A $10,000 job is priced at | about $15,150 |
Example, not a real company. Markup = 0.34 ÷ 0.66. Price = $10,000 ÷ 0.66.
Pay yourself inside the overhead, not out of the profit. If your own wage only shows up when there's money left, every job looks better than it is.
Signs you're charging too little
Under that bathroom video, one contractor wrote: "After this video I realized that I am working for free." Another: "WOW am I undercharging." If any of these sound familiar, run your numbers before the next bid.
- You're booked for weeks and the bank balance doesn't move.
- You win almost every bid you send.
- You pay for the surprises behind the walls yourself.
- Your own wage comes from whatever is left at the end.
- You can't say what you made on your last job.
- Your prices haven't changed in two years, and your costs have.
How contractors win more jobs without lowering prices
Check that price is really the reason before you cut it, because a discount comes straight out of your profit. Then set the price range before the visit, give options instead of a lower number, agree on the follow‑up before you leave, and ask the homeowners who said no what tipped it.
What a 10% discount costs you
- A $30,000 job at a 30% gross margin$9,000 profit
- Take 10% off the price$3,000 less
- What you keep$6,000
That's 33% of your profit gone. You'd need 1.5 jobs at the lower price to earn what one job earned at full price.
An example. 30% is close to the 29.9% average gross margin for remodelers (NAHB, 2026). Yours may be higher or lower, so run it with your own.
- Give the price range before you drive out. Ask for a budget on your form, and say a range on the first call: "Most decks like yours run $25,000 to $35,000. Does that work for you?" If they were thinking $20,000, you just saved a drive and an evening of pricing.
- Offer options instead of a discount. When the budget is the problem, take out scope, not price. A kitchen with the island at $62,000 and the same kitchen without it at $54,000 lets them choose. Cutting $62,000 to $54,000 tells them the first number was padded. A flexible start date can earn them a better price too, because it fills your slow weeks.
- Agree on the follow‑up before you leave. "Is it OK if I text you a few times over the next three weeks? Just reply yes, no or not yet." Every check‑in after that is one they said yes to, and each one shows you do what you say.
- Ask the ones who said no what tipped it. If the answer is trust, timing or a slow reply, a lower price wouldn't have won the job, and now you know what to fix.
A higher price is easier to sign when the bid shows why. Our guide to bidding construction jobs walks through it with a real bathroom: ask why they want the work before you measure, list what's in the price and what isn't, give two or three options instead of a breakdown, and follow up until you get a yes or a no.
One contractor in the comments put the rest bluntly: "stop doing great work for cheap for cheap people." His point was that the happy client who paid too little sends you friends who want the same price. Price for the clients you want, and follow up with the ones still comparing.
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The math: a midrange bathroom remodel costs $26,138 nationally (Cost vs Value 2025), and remodelers keep 29.9% of the price as gross profit on average (NAHB, 2026). That's about $7,800 from one job.
How much do contractors mark up materials?
There is no single number. The whole price has to cover the job's cost, your overhead and your profit. When a homeowner can look up a fixture's price online, a big markup on it invites questions, so some remodelers carry less on finishes and more on labor, or let the homeowner buy the finishes.
What's the difference between markup and margin?
Markup is the percentage you add on top of your cost. Margin is the percentage of the price you keep. A 30% markup on $10,000 of cost makes a $13,000 price and a 23% margin. To keep a 30% margin, you mark up about 43%.
Is a 20% markup enough for a general contractor?
For most remodelers, no. A 20% markup leaves a 16.7% gross margin. NAHB's latest study puts remodelers' average gross margin at 29.9%, and the average company spends roughly 24 cents of every dollar running the business, so a 20% markup wouldn't cover average overhead.
How do I know if I'm charging enough?
Work out what you made on your last three jobs after every cost, including your own wage and a share of overhead. If you can't, or the answer is close to nothing while you're busy, you're undercharging. Winning almost every bid you send is another sign.
Should contractors charge for estimates?
Plenty of remodelers keep the first visit free, and homeowners search for free estimates by name. Protect the time instead: publish price ranges for your main jobs, ask about budget and timing on the phone, and keep walkthroughs for homeowners who fit. On larger projects, a paid design phase credited to the job is common.
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