Quick answer: General contractors usually price a project by adding up subcontractor quotes, materials, their own labor and general conditions such as supervision, permits, dumpster and insurance, then applying markup for overhead and profit.
Pricing methods for general contracting jobs
| Method | When it fits |
|---|---|
| Fixed price | Projects with complete plans and specifications. |
| Cost plus a fee or percentage | Projects with open scope, where costs are passed through with an agreed fee. |
| Phased pricing | Large projects split into phases the customer approves one by one. |
You can use more than one method in the same business. What matters is that the customer can see which one applies to their estimate.
What drives the price of a general contracting job
- Subcontractor quotes for each trade.
- Material quantities and allowances.
- General conditions: supervision, permits, dumpster, temporary facilities.
- Project duration.
- Payment milestones and retention.
What to check before you quote
- Are there plans and specifications, or is the scope still open?
- Which trades will you subcontract?
- What are the permit requirements?
- How does the customer want to pay: milestones or phases?
Write the answers into the scope of work. When the price later depends on one of them, the customer can see the assumption you priced on.
Worked example: room addition, 12 x 16 ft
This is the example job in our free general contracting estimate template. The quantities and prices are illustrations to show the structure, not price recommendations; use your own costs and rates.
| Line item | Qty | Unit | Example amount |
|---|---|---|---|
| Plans, engineering and permits | 1 | job | $3,500 |
| Excavation and foundation | 192 | sq ft | $5,376 |
| Framing, sheathing and roof framing | 192 | sq ft | $7,296 |
| Roofing to match existing | 3 | square | $1,950 |
| Windows and exterior door | 1 | lot | $3,800 |
| Siding and exterior trim | 1 | job | $4,200 |
| Electrical rough-in and finish | 1 | job | $3,100 |
| HVAC extension | 1 | job | $2,800 |
| Insulation and drywall | 192 | sq ft | $1,728 |
| Flooring, paint and trim | 192 | sq ft | $2,688 |
| Site supervision and cleanup | 1 | job | $2,500 |
| Example subtotal | $38,938 |
Notice that each part of the price has its own line. A customer comparing your estimate with a cheaper one can see what the other bid may have left out, and you can discuss one line instead of defending the whole total.
Build your markup on real overhead
Whatever the method, a price has to cover four things: direct costs (materials and parts), labor at a loaded rate that includes payroll costs, overhead such as vehicles, insurance, software and the office, and profit. A simple check:
- Add up your yearly overhead and divide it by the hours you can bill in a year. That is the overhead each billable hour has to carry.
- Add it to your loaded labor cost per hour to get your break-even hourly cost.
- Add your profit margin on top, and use the result for both hourly and flat-rate prices.
Margin and markup are not the same: a 50% markup on cost is a 33% margin on the price. Decide which one you are using and apply it consistently.
Send the price, then follow up
Most general contracting estimates are not lost on price alone. They are lost when the customer goes quiet and nobody checks in. Agree on a decision date when you send the estimate and follow up once on that date. Our follow-up email templates give you the wording.
Want a ready-made layout? Download the free general contracting estimate template in Excel, Word or PDF, or see how SprigDeal handles a general contracting estimate from the first quote to the signed approval.
Frequently asked questions
How much markup do general contractors use?
It varies by market and project size. Build your markup from your actual overhead plus the profit you need, and apply it consistently to labor, materials and subcontractors.
Should I show subcontractor costs to the customer?
On a fixed-price estimate you usually show trades or phases, not each subcontractor’s quote. On cost-plus work the costs are shared by agreement.