What's a fair contractor markup?
Contractors don't charge you what materials cost them — they mark them up, and they charge for their time and overhead. That's normal and fair. The question is how much is reasonable, and where it crosses into padding.
Here's how the three pieces of a quote actually work.
Materials markup: 15–30%
Contractors mark up materials to cover the time spent sourcing, picking up, handling, and warrantying them — plus a little profit. 15–30% over their cost is standard across the industry.
Above about 35%, you're likely overpaying. You can sanity-check big-ticket materials yourself: a quick look at retail prices for cabinets, countertops, or fixtures tells you if the markup is reasonable.
Labor: it's all about the local rate
Labor isn't marked up the same way — it's priced at the going rate for skilled trades in your area, and that varies enormously by region:
- High-cost metros (NYC, SF, LA, Boston, Seattle): roughly $70–$130/hr
- Mid-tier metros (Denver, Austin, Atlanta, Phoenix): roughly $50–$80/hr
- Smaller cities and suburbs: roughly $40–$65/hr
- Rural / low-cost areas: roughly $30–$50/hr
If a quote implies a crew hourly rate well above your local market, that's a flag worth questioning.
The GC / project management fee: 10–15%
On larger projects, a general contractor adds a fee for managing the job — scheduling subs, ordering materials, handling permits, and carrying the risk. 10–15% of the project total is normal. Above 15%, especially as a separate line, is one of the most common forms of padding.
Putting it together
A fair quote = materials at cost + a 15–30% materials markup + labor at local rates + a 10–15% GC fee. When you see each piece itemized and within those ranges, you can sign with confidence. When you can't see the pieces — or they're above range — it's time to ask questions.
Got a quote in hand right now?
Skip the guesswork. Upload it and our AI checks every line against real local rates — and tells you exactly what's overpriced in 60 seconds.
Check my quote freeFrequently asked questions
What is the average contractor markup?
Materials are typically marked up 15–30%, and general contractors add a 10–15% fee on the total project. Labor is charged at local market rates rather than marked up.
Is a 20% project management fee too high?
It's on the high side. 10–15% is standard for a GC fee. A 20%+ fee, especially as a separate line, is worth questioning.
How do I check if material prices are fair?
Look up retail prices for the big-ticket items (cabinets, countertops, fixtures). If the quoted price is more than ~30–35% above retail, the markup is excessive.