What is the profit margin builders expect on a project?
It can vary widely, depending upon many factors. (Is the builder busy right then or is he anxious to get a new project underway? Did the builder recently sell a house for a big profit? etc.). In my years in the business, a third markup has been a consistent profit formula among many builders. This means if you build a 2500 sq. ft. house and your builder’s actual building costs are $175 per ft. (i.e. $437,500 in actual costs for the project), the builder would expect a profit equal to a third of actual building costs (or about $144,300). Adding the builder’s profit to the actual building costs would result in a final market or “retail” price of $581,800 for the home (approx. $233 per sq. ft.). If that same house were built using the Schweitzer Built method, you would pay the $437,500 (same) in actual building costs plus Schweitzer Built’s $85,000 fee, resulting in a total cost to you of $522,500 ($209 per sq. ft.) for your new home….. a $59,300 difference in the above example.
