About this episode
The bid lands in your inbox and the number stops you cold. What is all that markup? Where does it actually go? Is your contractor getting rich on your project? These are the questions almost every homeowner asks — and almost no content answers honestly, from the inside.In Episode 49 of The Awakened Homeowner, Bill Reid does what he does best: translates 35+ years of residential construction experience into knowledge that protects homeowners. Today's subject is contractor markup — what it is, what it covers, and why understanding it is one of the most powerful skills you can develop before signing a construction contract.We decode P&O (Profit and Overhead), the term that describes how every contractor bid is actually built. Every cost on your project — labor, materials, subcontractors, and equipment — carries a markup. That markup funds payroll taxes, workers' compensation insurance, licensing, office staff, vehicles, project management time, and the net profit that keeps a contractor financially stable enough to finish your project. The average net profit for a general contractor after all overhead is paid? Between 1.4% and 9%. Not the windfall most homeowners imagine.We also break down burdened labor — why a carpenter paid $30/hour might legitimately cost your project $60–$100/hour. We walk through the six things your GC's markup on subcontractors is actually funding. And we explain why trying to hire your own subs to skip the GC's markup is almost always a losing strategy — and what it costs you in coordination, accountability, and liability.By the end of this episode, you'll look at contractor bids differently. Not with suspicion — with understanding. And that's how an Awakened Homeowner protects their project.In This Episode You'll Discover:• What P&O (Profit and Overhead) means and the four cost buckets every bid is built from• Why contractor markup is not the same as profit — and why that distinction matters enormously• The burdened labor concept: how a $30 carpenter legitimately costs $60–$100/hr on your project• What payroll taxes, workers' comp, and benefits actually add to the real cost of employing a trades worker• The six specific things your GC's markup on subcontractors funds — from vetting the trade network to delivering a completed project• Why inserting yourself into the GC's supply chain by hiring your own subs breaks the accountability chain• Real industry data: average contractor net profit of 1.4–9% — and why the cheapest bidder is often the most dangerous choice• The 10-10 Rule (10% overhead + 10% profit = 20% baseline markup) and when custom projects need more• The surgeon analogy that completely reframes contractor pricing• How to read a contractor bid with confidence — including three red flags every homeowner should knowKEY TIMESTAMPS:0:00 — Introduction: What Happens When the Bid Lands1:45 — W
