b'BUSINESS companys overhead can be a graveDirect costs for the week-long mistakeformany.Yourbusinessjob:isaliveandalllivingthingsneed Labor = $70x40=$2,800something to stay aliveyour busi-Materials = $1,200nessneedsmoney! Yes,eventheIndirect costs for the week-long days you are not installing tile, yourjob:businessisspendingmoney.You Company overhead = $300have to spend some time to figure Owners salary = $1,600out exactly how much money yourThatweek-longjob(fivedays) business needs on a daily average.willcostBobsTileCompanya Onlythencanyoufoldthatcosttotal of $5,900. We have yet to add into what you should be charging.in a markup percentage for profit. As a business owner I like to payAsageneralruleacontractor myself the same salary every singlecompanyshouldaimtohaveat week, whether we installed tile orLEAST a 30% Gross Profit Margin not, so I consider my weekly salaryminimum. aspartofthebusinessoverheadSofortheexampleabove,Bob since it never changes, even if Imis going to sell the job for a 33% on a beach in Hawaii for a week. GrossProfitMargin,togivehim-So, how does one go about accu- self a little wiggle room. The way rately estimating and pricing theirhe calculated this math is to take tile work?hiscost($5,900)andmultiplyit by50%.(SeetheMarkupQuick The math Conversion chart.)Lets use an example called Bobs $5,900 x 50% = $2,950. This is Tile Company. Bob has two employ- the jobs gross profit.ees, one installer and one appren-Wenowhavethesalesprice tice.Bobpayshisinstaller$30/hr$5,900+$2,950 = $8,850.and his apprentice $15/hr. But that You can also arrive at this num-combined$45dollarswindsupber using $5,900 x 1.50 = $8,850costing Bobs Tile closer to $70/hrIf we want to double check the due to things like mandatory payroll taxesandworkerscompensation.Quick Conversion ChartBobs Tile also provides its employ-ees six paid holidays a year, whichGross Prot Markup Multiplieris accounted for. 33% 50% 1.50Bobisputtingtogetheranesti- 40% 67% 1.67mate for a job he is confident will take five days to complete. So he50% 100% 2.00goesaboutfiguringouthisesti- 60% 150% 2.50mate like this.32TileLetter | May 2020'