How much should you mark up a subcontractor? Reddit's working GCs answer this more honestly than any pricing guide: 20-40% total markup is the standard band in residential work, some firms run 50-70% and stay busy, and 10% gets you told - in those words - that you are one bad job from bankruptcy. This post pulls the actual numbers from the actual threads, then shows what they mean for a maintenance-contract operation like mine. For the full pricing method, the canonical guide is how much do general contractors mark up subcontractors; this page is the Reddit evidence file.
The thread every new contractor should read
r/GeneralContractor's "43% markup is crazy" starts with a newcomer scandalised that software data shows a 43% average markup - he charges 10%. Eighty-five comments later he has been re-educated. The numbers posted by working GCs, all in one thread:
| Number | Context |
|---|---|
| 43% | Average markup claimed by a construction software rep; sub-30% firms with real overhead "die" |
| 20-40% | "Never heard of anyone below 20, 40 is pretty standard" - residential remodel consensus |
| 50-70% | One firm's band, with constant work |
| 30% | Cited three times as the standard for overhead and profit |
| 10 + 10 | The old "10 overhead, 10 profit" rule - called outdated, 30-40% the real goal |
| 1.7x | Total multiplier used by a $1M/year remodeler |
| ~10% | Margins on large industrial jobs - volume changes the game |
| 15% | The overhead a $5M/year GC carries - his 25% markup nets 10% true profit |
| 67% | A remodeler's markup - who still went bankrupt, because markup does not fix bad operations |
The formula the thread converges on: overhead (15-40% depending on your shape) plus profit (~10%) equals a 25-50% total markup. And the book recommended repeatedly: Michael Stone's "Markup and Profit".
Markup is not margin - the mistake with its own body count
The most repeated lesson across these threads, including r/Construction's "words of wisdom" post: a 50% markup is a 33% margin. Price as if they were the same and every job leaks money you never see. When a Reddit GC says "43% markup", he means cost x 1.43 - which is a 30% margin. When your accountant says "30% margin", she means 43% markup. Two dialects, one number, expensive confusion.
What the layer below and the layer above look like
Two companion threads complete the picture. In r/Construction's "subcontracting companies, how much are you charging?", the subs post their own rates: $65/hour (told it is too low), $75-85 in Colorado, $115/hour journeyman in Salt Lake City, ~$200/hour for a two-man crew on small jobs. The top comment, at 62 points, is the whole market in one line: if they are happy with what you charge, you are not charging enough.
And in "what is your average gross profit margin?", a GC running 23-28% gross notes his plumbing and HVAC subs run 35%+ - the specialists often out-margin the generalist above them, because bid competition squeezes the GC layer hardest. Meanwhile "why wouldn't a company sub more out?" gives the commercial floor: on GMP contracts the markup on subbed packages can be as thin as 2.5-4%, versus ~15% fees on self-performed work - when you subcontract out the risk, you subcontract out the profit with it.
What this means on maintenance contracts
My operation lives at the opposite end from GMP commercial: reactive maintenance and repairs, won as the main contractor, delivered by subcontractors from a 1,400+ database. On that work the Reddit residential band holds and extends: roughly 20% gross running lean - win it, place it, oversee lightly - and up to ~60% gross in full project-management mode, where we scope, manage, evidence and warranty every job. The spread between those two modes is not greed; it is the price of the management actually delivered. The pricing and margins guide shows how to build the number, and the Reddit roundup collects what the threads say about the whole model.
Price from cost up, with overhead prorated per job, profit on top, and the humility to know a 67% markup did not save the operator who could not run jobs. The markup is the scoreboard, not the game.
This page summarises public Reddit discussions and our own operating experience. We are not affiliated with Reddit.
Frequently asked questions
How much do contractors mark up subcontractors?+
Per the r/GeneralContractor threads: 20-40% total markup is the standard residential band, some busy firms run 50-70%, large commercial jobs can run near 10% margins, and GMP contracts can carry as little as 2.5-4% on subbed packages. 10% markup in residential is repeatedly called a route to bankruptcy.
What is the difference between markup and margin?+
Markup is added to cost; margin is the share of the sale price. A 50% markup is only a 33% margin. Reddit's GC threads name this confusion as a top killer of construction businesses - price with the distinction or lose money invisibly.
Why do 10% markups fail?+
Because overhead eats them. One $5M-a-year GC in the threads runs 15% overhead, so a 25% markup nets 10% true profit. At 10% markup you are underwater before your first warranty call. 'One bad job away from bankruptcy' is the thread's phrasing.
What do subcontractors themselves charge?+
From the r/Construction rate threads: roughly $65-115 per hour per tradesman depending on region and trade, about $200 per hour for a two-man crew on small jobs. The top-voted advice to a sub was that if the firm above you is happy with your price, you are not charging enough.
Is marking up subcontractors ethical?+
The markup pays for winning the work, scoping it, carrying the contract, insurance and defects liability, and managing delivery. A GC who adds none of that deserves the criticism. One who does is charging for a real function - the same one every main contractor at scale performs.
Mohamed El HadriCo-Founder
I'm a co-founder of several construction companies. I built a construction business from a 30-van operation into a lean model with 1,400+ subcontractors in the database - winning the work as the main contractor, subbing it out, and running it as a system from a laptop across multiple countries. I write this site from what actually works.
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