# How the Markup Works

In your project below the list of parts, you’ll see a section labeled “Markup” with three parts below it: “Material”, “Labor”, and “Subcont”. These allow you to set your markup percentages for each of the three categories. In our the article about how costs are calculated for parts, we discussed that there are three aspects of the price for each part: material, labor, and subcontractor costs. Parts can either have material and labor or be subcontractor costs, this is to differentiate between costs to your company (if you buy the materials or pay the laborer) or a subcontractor (subcontractor buys the materials and you pay the subcontractor).

You can then markup each of these categories separately for your project. Lets imagine we have a part that is for providing and installing cabinets. The costs for that part might be like so:

Materials- \$500

Labor- \$100

Total- \$600

It is important to remember that this is the cost before any markup is applied (think of it like, the cost to you not the cost to the customer). Now let’s decide on  our markup percentages. You can change these easily by either typing into the percentage boxes, or clicking the + or – buttons.

Markup %’s

Materials- 50%

Labor- 25%

These percentages will be used to calculate the markup for all of the material and labor costs (not just for the single part that we have in this example. Let’s see how the markup in dollars gets calculated:

Materials- \$500 x 50% = \$250

Labor- \$100 x 25% = \$25

Total- \$275

Meaning that the total costs for this part (including the markup) will be:

Materials- \$500 + \$250 = \$750

Labor- \$100 + \$25 = \$125

Total Cost- \$875

You can see now how the markup gets applied to your parts. You can set your default markup percentages (so you don’t have to change them for each project) in Options-> Miscellaneous 1. Jeff Schroeder

More like a suggestion:
In the Markup area, it would be nice to have a box showing the Gross Profit percentage based on the markups. If it were placed either above or below the Base Bid box, then all the info needed is displayed in one spot.
It is a simple formula: Total Markup divided by Base Bid, expressed as a percentage.

1. Jack Dean

Hi Jeff,
Thank you for the suggestion! I’ve marked it down as a quick way to help show you the profit percentage.

Jack

2. Udi

HI all,
in my part of town we usually calculate the ratio of the sell not percentage of cost.
foe example:
if I estimate that my cost for the project or specific trade or task will cost 100\$, i will multiply it by the ratio i want to achieve.
100 X 1.25 = 125\$ total sale (price for customer)
would be nice,
i believe it is the same as the above only the way it is presented is different.

1. Jack Dean

Thanks for the question, and you’re right that it is the same.

Instead of 1.25 you just enter 25%, so there isn’t even additional math you need to do.

When you put in 25% as the markup into Clear Estimates, the software is adding 25% of the cost of the project, meaning it is exactly calculating by multiplying by 1.25.