8.03.00 Bid Section Markups

Section Markups are added to a Material, Labor, Subs, Equipment, and Other costs and Bid after Indirect Expenses are applied. Section Markups refer to Escalation, Tax & Burden, Overhead, and Profit, and are applied to each Section used in the Bid based on the information entered under Default Markups and Indirect Expenses.

Escalation is a global modifier for costs associated with Material, Labor, Subs, Equipment, and Others expenses and is usually job specific. Escalation is expressed as a percentage and may be entered as a positive or negative value. Escalation is an added cost to a Bid and does not change unit cost pricing at the Condition Detail dialog. It does, however, affect the selling price of each Condition.

Tax/Burden, Tax refers to sales tax on Material while Burden refers to taxes, fees, and insurance on Labor. Tax and Burden can be changed directly via the Markup Detail dialog for Material, Subs, Equipment, and Other expenses but because Burden is a calculated percentage based on Payroll Settings for all Payroll Classes used in a Section, it cannot be changed on a Section Markup Detail. To adjust Labor Burden on the Markup Detail screen, "All Bid Sections" must be selected and there must be a Labor Override specified in Payroll Settings/Burdens. Adjusting Burden via this method overrides Section/Payroll Class specific Burdens. Burdens may also be adjusted on the Payroll Tab. See Labor Burden Override for more information.
Escalation and Tax/Burden are not applied to Per Diem Indirect Expenses which is why Per Diem is located below Escalation & Tax/Burden on the Markup Detail dialog.

Overhead refers to general operating expenses. Overhead is applied as a percentage to the total costs in a Bid (material, labor, Indirect Expenses (optional), and Tax/Burden). Some estimators include Overhead with Profit leaving the Overhead field blank. Overhead is considered part of the cost of a Bid and therefore, Profit Markup is applied to it.

Profit is entered as a percentage of profit to apply to the total costs of a Bid (Material, Labor, Subs, Equipment, Other, Indirect Expenses, Tax/Burden, and Overhead). On the Markup Detail dialog, there are checkboxes adjacent to the Indirect Costs buttons (Stock, Clean, etc.) that turn off the Overhead and Profit for each of these expenses.

Markup Method

Section Markups are calculated by one of two methods: Straight or Gross Margin.

Straight Markup multiplies cost by a set percentage. Cost + (Cost * Markup Percent) = Total
Gross Margin Markup takes the Bid cost and divides it by the remainder of 1 minus the markup percentage. Cost / (1 - GM%) = Total (the Markup Detail displays the difference between the Total and Cost)

See Bid Markups & Indirect Expenses for a detailed comparison between Straight and Gross Markup Methods.

The Default Markup calculation method is set in Tools > Options > New Bids and can be changed on existing Bids by editing the Cover Sheet.

Adjusting Bid Markups