How do I configure my markup/tax?

updated

January 16, 2020

CoConstruct's estimating features make it easy for you to completely customize your markup amounts on your project, helping you quickly and easily calculate things like margin, overhead, commissions, contingency, taxes, and more.

 

What is markup or margin?

In CoConstruct, markup or margin is any additional calculation or percentage that you want to include in your budget, on top of the extended cost of a particular item.

While each Estimate will have a minimum of one markup calculation to track your profit, you can add or tweak your calculations to capture anything you will normally be including in your estimates.

Some ideas include:

  • Margin
  • Overhead
  • Contingency
  • Commissions

 

What is tax?

If you are required to collect or report sales tax from your clients for your project, the tax option lets you apply a percent of sales tax on the "pre-tax total" -- that is, after you have already factored in your markup or margin.

This generally applies to builders outside of the United States who may have a tax obligation such as:

  • Goods and Service Tax (GST)
  • Provincial Sales Tax (PST)

 

Configuring markup/tax for your projects

To customize markup for your projects, head to the Financials page > Estimate tab and select the option to "Configure Markup, Margin & Tax".

This option lets you directly customize the settings for the particular job you're working on.

Once you're familiar with how your markup is applied, you will want to explore options for setting default markup configurations for your account or for each of your templates.

Your account's default markup/tax

In most cases, your markup, margin & tax configuration may be the same across all of your projects. If that's the case, you'll want to update the default markup settings, which you'll do from the Main Menu > Settings > Estimating.

Updating the default markup configuration will set the new standard for future projects that you create, but will not change anything on your existing projects.

On your Selection Templates

If you have different neighborhoods of homes or mark up remodeling jobs differently from new construction, you can also configure unique markup settings for each of your Selection Templates when you go to the Main Menu > Templates > Selections. To do so, click "Configure Markup, Margin & Tax" to the upper right of each template.

This is completely optional, since you can always set the configuration in the projects where you will be using these templates. But, setting up the template configurations will help keep all of the calculations clear and accurate if you are updating financial details in your templates.

 

How is markup calculated?

For each markup that you add, you can choose whether to base the calculations as a markup, a margin, or a markup that's applied on top of other markups.

Ext Cost (Markup): Calculated off the base or extended cost. This is also known as a "Markup" calculation, since you are determining a percentage from that base cost.

Item Total (Margin): The final price of the line item (in columns) or the grand total of the project (in rows). This type of calculation is known as a "Margin" and is a percentage of the final sell price. Setting a 20% markup on the Item Total will ensure that the final sell price has a 20% cushion built in. If you set a 20% markup on the Ext Cost, on the other hand, this will be less than 20% of the final sell price.

Ext Cost + above Markups: This only comes into consideration if you wind up needing more than 1 markup calculation on a project. Think of the "Ext Cost + above Markups" option as a markup on top of other markups. So, if you have a markup for taxes, but want to apply a 10% profit markup on the total after tax, this is what you'll use.

Tax: Calculated off of the pre-tax total, after factoring in any other markup or margin calculations that you have defined.

For more information:

 

Applying markups per line item (in columns) or globally (in rows)

On Fixed Price projects, your markup will always be applied per line item in a configuration of columns.

On Open Book projects, your markup will be configured in rows by default, but you have the ability to choose which configuration you wish to use.

Markup per line item, in columns

Configuring your markups in columns lets you see how your different markup calculation are applied to each individual line item on your estimate.

So for each estimated cost that you've entered, you'll be able to see the corresponding dollar amounts for the markup.

You can also override these markups on a line by line basis, without changing the rest of your estimate. So if you want to tweak a few percentages or use a fixed dollar amount for certain lines, you can do that with your markup configured in columns.

Configuring your markup per each line item also lets you specify unique percentages for different "cost types". This will let you mark up labor costs differently than material costs, for example.

Markup globally, in rows

In Open Book projects, you may not want to configure or view your markup for each line item, opting instead to put all of those markups in a separate section at the bottom of your estimate.

This configuration will help if you simply want to add in a set margin or other markup that should apply to your entire project.

With your markup configured as a section of rows completely divorced from the costs, it's easy to see how the project's subtotal is transformed into the final price.

 

Overwriting markups after you've started an Estimate

You can always go back and update pricing or estimate information at any point in time, provided your selections aren't tied to a change order.

Simply go to your estimate and select the "Edit markup configuration" option. There, you'll be able to update your percentages as you see fit.

If you're applying markup in rows at the bottom of your estimate, that's all there is to it. When you save the new markup configuration, the new markup will take effect.

But, if you're applying markup per line item, in columns on your estimate, you can choose whether all of your existing calculations should be overwritten with the new percentages, or if you want to instead use the new values as the defaults for future line items that you add.

With markup configured as columns, you can always click on any of the percentages or dollar amounts to tweak markup line-by-line, but overwriting values from the configuration page will save you time if you need to, say, adjust all of your labor markup from 5% to 10%.

 

Cost vs. Profit Markup

For each markup that you add, you can choose whether to denote the amounts as cost or profit. In your estimate and on budgets for fixed price projects, CoConstruct will use these settings to help you keep track of your estimated profit before the project starts, and your actual profit as the project is in motion.

 

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