Sub bids, O&P markup, and allowance schedules. Choose a project type below for a complete step-by-step guide with formulas, waste factors, productivity benchmarks, and pro tips.
General contractor pricing is built from the bottom up: subcontractor bids for each trade, allowances for client-selected items (fixtures, finishes, appliances), self-perform line items where the GC is doing the work, and a markup on top covering overhead and profit. Industry-standard O&P (overhead and profit) markup runs 15–25% on residential remodels, with smaller jobs warranting higher markup because the fixed cost of running an estimate, contract, and project is the same whether the job is $20K or $200K. Estimating accuracy depends on getting at least three sub bids per trade — single-source bids are a risk and a regulatory issue in some jurisdictions. The GC's margin lives in three places: markup discipline (resisting the urge to discount markup to win the job, which is a race to the bottom), change order pricing (changes always carry a higher markup than original work, typically 25–30%), and allowance schedules tight enough to be honest but generous enough to absorb routine selection upgrades. Thin allowances are the single biggest source of customer disputes — a $3,500 cabinet allowance on a kitchen remodel is unrealistic and the conversation when the actual selection runs $9,000 is unpleasant for everyone. General conditions — port-a-john, dumpsters, temporary power, supervision time, project insurance — are a separate line and run 8–12% of total project cost on a typical mid-size remodel. Project duration drives general conditions linearly; a 12-week kitchen costs more in general conditions than a 6-week one even if the scope is the same.
Get three bids per trade. The spread tells you whether the trade is competitive in your market or whether one sub is sandbagging. Pick the second-lowest, generally — the lowest is often missing scope.
Allowances should reflect realistic mid-tier selections, not bottom-of-line stand-ins. A too-low allowance is a change-order conversation waiting to happen.
General conditions (supervision, insurance, dumpsters, port-a-john) are time-based. A 12-week project costs roughly 2× general conditions of a 6-week project — even at the same scope.
GC is typically responsible for pulling the permit, scheduling all inspections, and meeting inspectors. That's 5–15 hours over a typical remodel — paid time.
Discounting O&P to win the job feels strategic and is actually corrosive. If a 20% markup loses the bid, the customer wasn't going to be a good fit at 15%.
Allowances are the GC's tool for fairness, not for cost-hiding. Set them at realistic mid-tier prices and document selection deadlines in the contract.
Port-a-john, dumpster swaps, temp power, supervision time, project insurance — itemize these. Folding them into the markup understates the project and squeezes margin.