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Financialaka: overhead and profitaka: O&Paka: contractor markup

GC Markup

In Plain English

The percentage a GC adds to costs to cover their overhead and profit.

Definition

GC markup is the percentage or fixed amount added by a general contractor to the cost of work, materials, or subcontractor scope to cover overhead and profit. Standard GC markups on subcontractor change order work are typically 10% overhead plus 10% profit (10/10), though amounts vary by contract, market conditions, and project type. Markup on self-performed work typically covers direct project costs plus a portion of home office overhead.

Why It Matters in Bidding

GC markup is where a general contractor's overhead recovery and profit live, so how it is structured directly determines bid competitiveness and margin on change orders. During buyout and negotiation, owners often scrutinize and cap markup percentages, and the contract language on markup for subcontractor change work can decide whether a project finishes profitable or thin.

Example

When pricing a $50,000 subcontractor change order, the GC applies the contract's 10% overhead and 5% profit on subs, adding $7,500 in markup to the owner's change order.

Related Terms

Change OrderGeneral Conditions CostJob CostingContingency

Frequently Asked Questions

Many contracts cap markup on subcontractor change work at a combined 10 to 15 percent for overhead and profit, often lower than the rate on self-performed work. The exact figures are negotiated in the contract's changes article, so estimators should read those caps before pricing changes rather than assuming a standard rate.
General conditions are project-specific costs like the superintendent and site trailer, estimated as their own line item. GC markup is a percentage layered on top of all costs to recover home-office overhead and profit. A bid carries both, and confusing them leads to either underrecovery or double-counting overhead.
Most contracts allow markup on both, but at different rates, since the GC manages and warrants subcontractor work even without performing it. The applicable percentages and whether markup compounds on lower-tier subs are defined in the contract, so verify before submitting a guaranteed maximum price or change order.

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