Don’t Price Like Your GC: Why Trade Contractors Need a Different Strategy

When subcontractors find that pieces of the money puzzle are missing, it could be because they are pricing the same way their GC prices, which doesn’t work for them.

The Markup vs. Margin Difference

This post aims to help construction trade contractors understand that copying a general contractor’s pricing model is a mistake and why they must develop their own margin-driven strategy.

The Markup vs. Margin Temptation

Many subcontractors price their work the way their GCs talk about pricing—using markup rates of 10%, 15%, maybe 20%. But that certainly doesn’t work for trades, and here’s why. 

The GC Role 

GCs usually don’t self-perform—they manage subs.

Their profit is built into management fees and volume, not direct labor and materials.

Their markup accounts for the entire project's expenses. 

The Trade Contractor Role

It is the trade contractors who carry the real load – they are responsible for:

• Labor burden

• Materials

• Equipment

• Subcontractor costs

• Field risk and jobsite realities

If you copy a GC’s markup strategy, you’re almost guaranteed to undercharge and bleed cash.

A Real-Life Example

One of our GC clients came to us frustrated. He told us, “Every time we self-perform, we lose money. But we’re making money when we sub it out.”

We walked him through how our trade contractor clients bid. We explained to him that to “make money” on projects, trade contractors do this:

• They budget accurately.

• They calculate labor burden.

• They use markup that aligns with their desired margin, not someone else’s number.

Our client had an aha moment and changed how he bid self-performed work forever. Now, he doesn’t just “add a little” to costs. He prices based on the margin he needs to stay profitable. He now bids self-performed work differently and profitably.

The Do's and Don'ts of Margins 

Do: Know your numbers.

Do: Markup with purpose—and measure margin to ensure it works.

Don’t: Guess.

Don’t: Copy your GC's margin or markup practices.

Get Markup and Margin Help

Markup and margin can be missing puzzle pieces for construction trade contractors. The Profit Constructors’ team can help you complete the puzzle successfully and profitably. Call us at 866-629-7735 to learn more about how we can help you. 

Ambitious Construction Contractors look to The Profit Constructors to provide advocacy in dealing with:

• Clients and customers

• Employees and subcontractors

• Vendors and service providers

• Governmental entities 

Working with The Profit Constructors gives Construction Contractors the means to organize their operations in ways that help them:

• Remain informed

• Avoid hassles

• Reduce risks

• Be future-ready

Ready for action? Or want to know more? Get in touch today to schedule a complimentary discovery call. 866-629-7735