Ask the average small builder on the
street what his net profit is and you'll probably
hear something like, "Well, I made
$70,000 dollars last year." But, in fact,
that number is probably what's left over
after paying for materials, labor, and
subcontractors. What most builders
forget is that the cost of doing business
still has to come out of that
money. In other words, they forget
about their overhead.
But even builders who know
what their overhead is often
confuse it with the markup
they apply to get the final selling
price for the jobs they estimate. To know
the difference between overhead and markup, you
have to understand the relationship between three
basic concepts: gross income,