Reports
How much markup should a builder charge?
This page will not give you a percentage, and that refusal is its most useful sentence: no published number knows your overheads, your turnover or your market, and the forum answer someone else swears by may be precisely the number that is quietly closing their firm.
QScope Team·5 August 2026·5 min read
Start by splitting the word, because “markup” hides two different numbers, and confusing them is how builders undercharge while believing they are profitable:
Number one: overhead recovery, which is arithmetic
Your firm costs money to exist before any job starts: your own time not on the tools, the office or the kitchen table admin hours, insurance, accountancy, the van fleet, software, training, tender time on jobs you did not win. Add it up for a year, from your accounts, honestly, including a market wage for yourself, because a firm that only works if the owner is free labour is not profitable, it is a badly paid job with liability attached.
Then divide by the year’s realistic direct cost of jobs, and that ratio is your overhead recovery rate: what every job must carry on top of its direct costs just for the firm to break even. It is not profit. A job priced at cost plus overhead recovery makes you nothing; it merely fails to lose. Most builders who do this calculation for the first time discover their habitual markup was recovering overheads and calling the recovery profit, which is why the good years never left any money behind.
Number two: profit, which is a decision
On top of true cost including overheads goes profit, and here judgement genuinely enters: what the market bears for this work, how badly you need the job, what the risk deserves, what the client is like. Two disciplines keep the decision honest: decide it per job, explicitly, a percentage chosen, not inherited, and never let profit be the contingency. If the job carries risk, price the risk as its own line, the layer structure from the pricing page, because a profit margin that is really a risk fund disappears the first time the ground surprises you, and then the job worked for free.
Where the markup leaks after you set it
Setting the number is half; keeping it is the other half, and this series has the map: the six quiet leaks, the free extras, and the discount conversations at the end of the job and the end of the negotiation. A firm that knows its overhead recovery rate also knows exactly what a “small” discount costs: a client asking for five points off a job priced at cost plus overheads plus eight is asking for more than half your profit, and being able to say that sentence, or at least know it, changes the negotiation.
What to do this week
1. Do the overhead sum for last year, from the accounts, with your own market wage in it, and get the recovery rate.
2. Re-read your current live quotes against it: which jobs are actually contributing profit, and which are merely feeding the overhead?
3. Write the two numbers into your estimating template as separate visible lines, recovery and profit, so no future quote merges them again.
Where the information stops
What profit the market in your area bears for your kind of work is local knowledge no page holds, and whether your overheads themselves are too heavy for your turnover is an accountant’s conversation; this page gives you the arithmetic to bring to it, which is more than most of the trade brings.