HOW GENERAL CONTRACTORS MARK UP SUBCONTRACTORS.
General contractors mark up subcontractor and material costs by 10% to 20%, most often around 15%, to cover their overhead, risk, and profit for managing the project. That markup comes out of the owner's budget, not yours. What decides your margin is whether your own bid recovered your real cost and overhead.
This is one of the most misread numbers in commercial construction. Subs hear that the GC is making 15% on their work and read it as 15% taken off the top of their own price, and the arithmetic works differently. The GC fee sits above your bid in the owner's budget, so the owner funds it and you collect what you billed. Every dollar of your margin is decided before the bid goes out, in whether your price carried your real cost and your real overhead rate.
WHAT IT MEANS.
A general contractor markup is the percentage a GC adds to subcontractor and material costs to cover its own overhead, risk, and profit.
GC markup runs 10% to 20% and typically sits around 15%. The fee covers scheduling, coordination, supervision, insurance, bonding, and warranty obligations, which are real costs of running a project. A 15% markup doesn't net the GC 15% after their own overhead comes out of it.
How visible the markup is depends on the contract type. On lump sum work it runs 10% to 20% and the sub never sees it. On cost-plus and GMP contracts it runs 8% to 15% and is stated as a fee percentage. On CM at risk it runs 8% to 12% and is also stated. Risk allocation differs too: the GC carries the overrun on lump sum, it's shared to a cap on cost-plus and GMP, and the GC carries it to the GMP cap on CM at risk. In all three, the source of your margin is the same thing, which is your own job costing.
THREE WAYS SUBS GET THIS BACKWARD.
The GC is taking my margin
The markup sits above your bid inside the owner's budget rather than inside your contract amount. A $100,000 bid with a 15% GC markup means the owner pays $115,000 and you collect the full $100,000 you bid. Nothing about the GC fee reduces what comes to you, so treating it as a deduction from your margin points the blame at the wrong number.
I have to beat the markup
Owners compare your scope against the other subs in your trade, not against the GC's fee. Cutting your number to offset a markup that was never coming out of your money gives up overhead recovery for nothing. That's how a sub wins a job at a price that can't carry the business.
Markup and margin are the same thing
Markup is a percentage added to cost. Margin is profit as a percentage of the selling price. A 15% markup is roughly a 13% margin, and subs who use the two words interchangeably overstate what they're making on every job. That single confusion is enough to make a break-even year look like a profitable one.
WHAT IT LOOKS LIKE IN DOLLARS.
A $100,000 bid with a 15% GC markup results in the owner paying $115,000 while the sub collects $100,000. The markup was funded by the owner's budget and it never touched the sub's contract amount. That's the whole answer to the question of whether GC markup comes out of your profit.
A 15% markup approximates a 13% margin, because markup is calculated on cost and margin is calculated on the selling price. A sub who quotes 15% and reports 15% is overstating profitability on every job they run. The correction is arithmetic rather than strategy, and it changes what your target number should be.
The Construction CFO has recovered over $2.1M in client accounts receivable since 2023, and almost none of it came from renegotiating a GC markup. It came from billing correctly, collecting on a schedule, and pricing overhead into the work. That's the part of the equation a subcontractor controls.
THE FOUR LEVERS YOU CONTROL.
Every bid carries fully burdened labor, equipment, material, and your real overhead rate before profit is added. This is where margin is won or lost, not at the negotiating table with the GC. A bid that doesn't recover overhead loses money at any GC fee level.
Actual cost gets compared to the estimate every week at the phase level while the crew is still on site. That's the only point where an overrun can still be corrected. Monthly review tells you what happened, and weekly review lets you change it.
Anything outside the original scope gets a written change order before the work goes in. Verbal direction with no paper is unrecovered cost sitting in your job. This is the most common place a profitable bid turns into a break-even project.
Your overhead rate is calculated off trailing actuals and updated, not carried forward from a number somebody set three years ago. Bidding on a stale rate under-recovers on every job you win. No other number in the estimate moves your margin as far for as little work.
FLAT MONTHLY FEE. NO SURPRISES.
Three tiers, priced by your trailing twelve month revenue. Which one you're in depends on how much of the work you want off your desk. No hourly billing, no payroll, and no add-ons.
Pricing
| Last 12 months revenue | Monthly fee |
|---|---|
| Up to $1M | $1,900 to $2,900 |
| $1M to $3.5M | $2,600 to $3,900 |
| $3.5M to $6.5M | $3,800 to $5,700 |
| $6.5M to $9.5M | $5,100 to $7,100 |
| $9.5M to $12.5M | $6,100 to $8,500 |
| $12.5M to $15.5M | $7,400 to $11,000 |
| $15.5M to $18.5M | $9,400 to $13,500 |
| $18.5M+ | Quoted individually |
Range reflects the three tiers below. Which one you're in depends on how much of the work you want off your desk. No payroll. No hidden line items.
You stop guessing.
You get the CFO work. Job costing built against the way you estimate, a 13 week cash forecast, monthly WIP, and a meeting every month that ends in decisions rather than a report.
Your bookkeeper keeps doing the books.
You stop touching the books.
Everything in Core, and we run the bookkeeping and the controllership as well. Nobody in your office is answering coding questions or chasing a reconciliation at month end.
We do the books. No payroll.
Every job shows its margin while it's still running.
Everything in Executive, plus the job costing and WIP platform set up, loaded with your cost codes, and managed for you every month. You never have to learn it.
We do the job costing.
FREQUENTLY ASKED.
