RenoSummit seminar report: How much should you be marking up your work?
Contractors should be marking up their direct job costs (labour and material) between 50 and 65 per cent, if they want to make a good profit, Remodelers Advantage president Victoria Downing told contractors in Whitby, ON
By Steve Payne
A truly professional renovator – in a decent market – should be marking up their direct job costs by 50 to 65 per cent, to yield a decent profit.
That was the advice that Victoria Downing, president of the Maryland-based renovation contractor training organization Remodelers Advantage, gave an audience of 40 contractors attending the RenoSummit seminar in Whitby, ON yesterday.
(If you are in Southwestern Ontario, you can catch the one-day RenoSummit business seminar LIVE, at the Delta London Armouries, 8 am to 5 pm, Friday, Nov. 8. Click here to register.)
Direct job costs are the cost of materials and labour associated with a job.
If a job costs $10,000 in material and labour, then the quote to the homeowner should be 50 to 65 per cent higher than that – $15,000 to $16,500.
Many contractors will balk at this kind of markup, especially in a competitive market with underground cash competitors everywhere.
But this is the kind of markup you may need to get to the 8 to 10 per cent net profit on a job, Downing said, after deducting a salary for the owner as well as overheads like vehicles, office expenses, WSIB, fees, permits, cellphones and more.
Downing acknowledged that some contractors will gasp at the extent of that markup.
“But I can give you lots of names of contractors we work with, on both side of the border, who are doing exactly that,” Downing said. “It’s doable. It’s all around you..”
“You deserve a return on investment for being in such a risky business,” Downing concluded.