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QB - 08.01.02 What is the Difference Between Straight and Gross Markups Calculation?

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You can choose to use Gross or Straight Markup Method for how Quick Bid calculates Overhead, Profit, and Additional Markups.

Straight Markup - costs (Material, Labor, Subs, Equip, and Other) are simply multiplied by the % you set to calculate a Markup amount which gets added to your cost
Gross Markup - costs are divided by 1 minus the % you set to create a gross amount, then the original cost is subtracted from this gross amount to give you your Markup amount

You set your Markup Method on the Cover Sheet for each Bid (you set your New Bid defaults in Tools > Options > New Bid).

Note

You set the Markup calculation on the Cover Sheet, see Creating a Bid: Setting Bid Preferences on the Cover Sheet for more information on setting Bid Preferences.
Markup calculation only affects Overhead and Profit.

Straight Markup

Straight Markup starts with your Bid costs and multiples them by the percentage you set to calculate the Markup amount that gets added to the original Bid cost.

In the example we've configured a 20% markup for Overhead and 20% for Profit. Let's see how these Straight markups are applied to a Subs cost of $2000.

The Overhead calculation is [Cost](2000) x [markup %](20%) = markup amount (400)
The Profit calculation is the [(Cost + Overhead)](2400) x [markup %](20%) = markup amount (480)

Gross Markup

Gross Profit Margin, on the other hand, takes Bid cost and divides it by the remainder of 1 minus the markup percentage.

This can be a little confusing because the calculation is not as evident - the Markup amount is the difference between the Bid Cost and the Marked Up Bid Cost.

Again, we will apply a 20% markup for Overhead and 20% for Profit and the beginning cost is still $2000.

The Overhead calculation is: [Cost](2000) [(1-markup %)](.80%) = gross marked up amount (2500)

The actual calculation produces a marked-up amount (2500) from which the original cost (2000) is subtracted to produce the markup amount shown in Markups Detail (500)

The Profit calculation is ([Cost](2000) + [Overhead] (500)) [(1-markup %)](.80%) = gross marked up amount (3125)

The actual calculation produces a marked-up amount (3125) from which the original [Cost + Overhead] (2500) is subtracted to produce the markup amount shown in Markups Detail (625)

Note

Changing Markup Method (on the Cover Sheet) affects Profit and Overhead calculations. Addition Markups based on % may be calculated using Straight or Gross method, this is designated when adding the Additional Markup covered later in this Chapter.

Viewing Options for Markup Detail

What Are Indirect Expenses? (Stocking, Cleaning, Per Diem, and Supervision)

QB - 06.01.02 Creating a Bid: Setting Bid Preferences on the Cover Sheet