Download PDF version (158.4k) Log In or Register to view the full article as a PDF document.
A few years ago, I wrote a column in which I tried to clear up some of the confusion surrounding the terms "mark up" and "margin" (Business Forum, 2/95). In that article, I explained that many contractors who use a multiplier to "mark up" their estimated costs actually underprice their jobs by 5% or more. I suggested throwing out the term "mark up" in favor of "gross profit margin," and I provided a method for arriving at the proper selling price that uses a divisor. Since then, however, I've talked with many builders and remodelers who are still confused, not only about how to calculate gross profit but also about how the resulting percentage relates to estimated costs