What % markup would a typical Austin general contractor charge?

[Chris Schorre]

Hi everyone, I have a project coming up that involves construction of a 1,400 sf addition in Central Austin. Nothing fancy, no special requirements. I am wondering if anyone has a sense for what percentage markup a GC would charge for a project such as this. 15%? 20%? I have worked with a GC before but that billing process was a bit opaque (big surprise). Trying to avoid that this time...

[Aidin Halebic]

As an estimator working for a successful general contractor in the Austin area, the markup depends on too many factors and variables but the ones that carry the most weight would typically be size of project, type of project, and the relationship one has with the client/owner. 

We like to do GMP pricing as it benefits both parties and there is typically less ******** than other contract types. Another thing to take into consideration is that "15%-20%" markup  you mention usually includes overhead, risk, and profit. 

For perspective and example...

Regarding size of project, I'm not going to build your 1,400 SF tenant improvement which consists of "$140k" in hard costs and charge you $168k. No I will probably charge you $190k because that is what is worth our time to allocate our resources (subs whom we've worked with for almost a decade) for such a small project. Now if your project is worth 6MM, 20% total including overhead, risk, markup is the norm here. Simple advice is as the cost of a project scales, the profit linearly decreases.

The type of project has also a major influence on cost and markup. Restaurants cost more to build than healthcare. Healthcare costs more to build than government jobs per SF.  

The relationship with client also has a great deal of influence on overall price. If you're honest upfront and you're dealing with an honest GC, then both parties typically will meet in the middle and both will be happy. If you're shady or the GC is shady, then most likely the project will be a headache. 

I'll add a fourth one for fun, the experience a GC has in a specific market has a substantial impact on how they price the project. You're not going to find a GC who only builds schools to be competitive with a restaurant GC when it comes to pricing restaurant projects.

Hope this helps!