How you calculate costs is important when bidding for profit. During his presentation at the 2014 Concrete Polishing Luncheon & Forum at World of Concrete, David Padgett, president of Polished Concrete Solutions in Norris, Tenn., illustrated how to compute a well-thought-out bid. For simplicity’s sake, costs in the below tables are based on a 10,000-square-foot slab and rather cheap labor. (A and B)
(C) Padgett’s model includes a line item for machine depreciation to cover any payments being made on equipment as well as upkeep. “You have to build it in somewhere to pay for the cost of maintaining your equipment,” says Padgett.
(D) The calculations also include 40% overhead. “It sounds like a ridiculous number at first,” says Padgett. “But it’s not.” The overhead line item is included before the markup is calculated, so that 40% after markup is probably about 17% of the total cost, he explains.
“I’ve seen contractors charge 12% for overhead, and then wonder why they can’t cover what they believe is a 12% overhead in their business. The reason is, after they put their markup in, it drops down to 5% or 6%—so they’re never actually charging 12% gross overhead on the project.”