Found out my custom builder charges 18% overhead on materials but only 12% on labor - is that normal?

I was going over the contract line by line and spotted that discrepancy in the markup percentages, so is this just how builders balance their margins or am I getting hosed on materials.

2 comments

2 Comments

clark.iris2d ago

I noticed that "12% on labor" part jumps out to me, because that's actually low for labor markups in my experience. Most builders I've dealt with put a bigger premium on labor since it's risky if subs don't show up or work takes longer than expected. So maybe he's lowballing the labor percentage to make the overall number look better, while padding the materials to cover any hidden costs from supplier delays or price jumps.

evan_dixon672d ago

Exactly this, @clark.iris. Same thing happened to me last year. Builder had labor at 10% but materials at 20% and when I questioned it he said it was just how they "smooth out the risk." Felt like I was getting played.