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What is the "markup" in construction pricing?

Discount applied to project costs

Additional percentage for overhead and profit

Markup in construction pricing refers to the additional percentage applied to the direct costs of a project to cover overhead expenses and provide profit. This practice is essential for contractors to ensure that all indirect costs—such as administrative expenses, labor, equipment, and general business costs—are accounted for in the final pricing of a project. By applying a markup, contractors not only allocate funds for their business operations but also secure a profit margin on the work performed.

Understanding markup is crucial for accurate project budgeting and pricing strategies, as it affects the overall cost clients will pay for construction services. It balances the direct costs incurred by the contractor with the financial viability of the business, ensuring that the contractor can sustain operations while delivering quality results.

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Fixed fee for project management

Cost of materials only

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