Template · Bidding
Bid price build-up: overhead, profit, markup and margin
Build a bid price from direct cost with job and home office overhead, contingency, profit, bond and insurance.
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XLSXCSVODSXMLNumbers| Bid price build-up: overhead, profit, markup and margin | ||
| Example data — replace the blue input cells with your own. | ||
| BID PRICE | MARKUP ON DIRECT COST | PROFIT MARGIN ON BID PRICE |
| $3,826,941 | 33.4% | 6.4% |
| Direct cost and overhead inputs | ||
| Labor hours | 12,400 | Estimated craft hours for the work |
| Wage rate (USD per hour) | $38.50 | Base wage, before burden |
| Labor burden (payroll taxes, insurance, benefits) | 42% | Percent of base wages |
| Materials | $1,250,000 | Before sales tax |
| Sales tax on materials | 7.25% | |
| Equipment | $185,000 | Owned or rented equipment for the job |
| Subcontracts | $620,000 | Subcontract amounts, before markup |
| Other direct costs | $45,000 | Permits, travel, small tools and similar |
| Job overhead and general conditions | $310,000 | Site staff, trailers, temporary facilities for this job |
Showing the first 16 of 58 rows and 3 of 3 columns. Cells with formulas show the formula on hover.
| Profit scenarios: 0% to 20% in 2% steps | |||||
| Each row reprices the bid at a different profit percent, with every other input from the Build-up tab. | |||||
| Base profit percent (Build-up tab) | 7.0% | ||||
| Base bid price (Build-up tab) | $3,826,941 | ||||
| Profit percent | Cost before profit | Profit (USD) | Bid price | Profit margin on bid | Difference vs base bid |
| 0% | $3,501,472 | $0 | $3,576,580 | 0.0% | -$250,361 |
| 2% | $3,501,472 | $70,029 | $3,648,112 | 1.9% | -$178,829 |
| 4% | $3,501,472 | $140,059 | $3,719,643 | 3.8% | -$107,297 |
| 6% | $3,501,472 | $210,088 | $3,791,175 | 5.5% | -$35,766 |
| 8% | $3,501,472 | $280,118 | $3,862,707 | 7.3% | $35,766 |
| 10% | $3,501,472 | $350,147 | $3,934,238 | 8.9% | $107,297 |
| 12% | $3,501,472 | $420,177 | $4,005,770 | 10.5% | $178,829 |
| 14% | $3,501,472 | $490,206 | $4,077,301 | 12.0% | $250,361 |
| 16% | $3,501,472 | $560,236 | $4,148,833 | 13.5% | $321,892 |
Showing the first 16 of 18 rows and 6 of 6 columns. Cells with formulas show the formula on hover.
| Bid price build-up |
| Notes: what this workbook does, how to use it and the method behind it. |
| What it does |
| Builds a bid price from direct cost. Labor, materials, equipment, subcontracts and other direct costs are added up first; job overhead, home office overhead and contingency follow; profit is applied to the cost so far; and the bond premium… |
| How to use it |
| 1. Enter labor hours, wage rate and labor burden on the Build-up tab, with the other direct costs, job overhead and percentages. |
| 2. Read the bid price and the markup and margin results. The KPI tiles at the top show the bid price, markup on direct cost and profit margin on the bid. |
| 3. Use the converter to move between a markup on cost and a margin on price. |
| 4. Open the Scenarios tab to see how the bid price changes with profit from 0% to 20%. |
| Formulas and method |
| Burdened labor: labor hours times wage rate, times (1 + labor burden %). |
| Home office overhead: percent times (direct cost plus job overhead). Contingency: percent times (direct cost plus job overhead plus home office overhead). |
| Profit: percent times cost before profit. Bid price: (cost before profit plus profit) divided by (1 - bond % - insurance %). |
Showing the first 16 of 31 rows and 1 of 1 columns. Cells with formulas show the formula on hover.
What does this template do?
A contractor builds a bid price in layers: direct cost, job overhead, home office overhead, contingency, profit, and then the bond and insurance that the bid must carry. This workbook sets out those layers in order. The Build-up tab takes labor hours and wage rate, a labor burden percentage, materials with sales tax, equipment, subcontracts and other direct costs, then applies the overhead and contingency percentages and the profit percentage.
The bond premium and insurance are percentages of the bid price itself, so the bid is solved as cost plus profit divided by one minus the bond and insurance percentages. The workbook reports the total markup on direct cost, the profit margin on the bid price, the net profit in dollars and as a percent of the bid, and a break-even price with zero profit. A converter moves between a markup on cost and a margin on price, because the two are different measures.
The Scenarios tab reprices the bid at profit percentages from 0% to 20% in 2% steps. All figures are fictional example data, and the bond and insurance rates are illustrative.
What’s inside
- Labor burden applied to wage cost, then sales tax on materials
- Home office overhead, contingency and profit applied in order
- Bid price solved so that the bond premium and insurance are part of the bid
- Markup on direct cost, profit margin on bid price and net profit shown together
- Markup and margin converter with a profit scenario table from 0% to 20%
Which tabs does the workbook have?
| Tab | What it holds |
|---|---|
| Build-up | Inputs for labor, materials, overhead, contingency, profit, bond and insurance, with the bid price and results. |
| Scenarios | Bid price, profit, margin and difference from the base bid at profit percentages from 0% to 20%. |
| Notes | Purpose, steps, formulas used, assumptions and limits. |
What formulas does this template use?
This template holds 87 formulas in 229 cells across 3 tabs, so 38% of its cells calculate. They use 3 distinct functions; the longest formula is 51 characters and 24 of them read from another tab.
| Function | Uses | What it does |
|---|---|---|
IF | 19 | one result when a test is true, another when false |
ABS | 2 | absolute value |
SUM | 2 | adds numbers |
Counted from the workbook itself. Only functions that Excel, LibreOffice Calc, Google Sheets and Apple Numbers evaluate the same way are used, so the formulas survive every download format.
How do you use it?
- On the Build-up tab, enter the labor hours, wage rate and labor burden percentage.
- Enter materials, sales tax, equipment, subcontracts and other direct costs, then the job overhead.
- Enter the home office overhead, contingency, profit, bond and insurance percentages.
- Read the bid price, markup on direct cost, profit margin and net profit from the results block.
- Open the Scenarios tab to see the bid at each profit percentage from 0% to 20%.
What is it good for?
- Setting a bid price from direct cost for a general contractor
- Converting a target markup on cost into the margin on the bid price
- Testing how the bid changes at different profit percentages
Questions about this sheet
What is the difference between markup and margin?
Markup is profit as a percent of cost, and margin is profit as a percent of the price. A 25% markup gives a 20% margin on the same price, so the two should not be compared directly.
Why is the bond premium part of the bid price?
The bond premium is a percent of the bid, so it depends on the price. The workbook solves the bid as cost plus profit divided by one minus the bond and insurance percentages, so the bid carries its own bond and insurance.
Does the calculator allocate overhead to each job?
No. Job overhead is entered as a dollar amount, and home office overhead is a percentage. Allocate them before entering the figures if your company uses a different method.