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10% Profit + 15% Overhead = 25% Gross Profit.
100-25% = 75%
You should divide all project "cost" by .75 to determine your estimate.
Example: You are preparing a bid for a remodeling job. The materials and labor will "cost" you $68,000. To accurately prepare the bid, divide 68,000 by .75 = $90,666. This is what you contract amount should be.
130K Divided by 30K = .23 (23%)
Markup and gross profit are often mixed up. Markup is the factor you apply to your estimated job cost to decide what your customers cost will be.
For Example: You estimate the cost to do a job is $1000,000 and you want to mark it up 30%. You determine the contract you will agree to will be in the amount of $130K.
Did you really make 30%? No. Gross profit is computed by subtracting the cost of sales (Material, labor, tools etc.) from your contract price. The "profit" percentage is equal to gross profit divided by the contract price.
Tape Measures indicate whole numbers in inches and fractions of an inch in increments of 1/16"
IMPORTANT CONVERSIONS FRACTION to DECIMAL
Don't make costly mistakes in your math! Follow this simple tips.