USA How to calculate labor markup

[LouisTully]

My company is a manufacturer and we markup the materials and labor when quoting jobs. One customer asked if they could supply the materials and we would charge for only labor. Our labor is about 15% of revenue, materials about 50% of revenue. The remaining 35% is markup. What is a standard markup for labor only to ensure we are not only covering our costs but also earning a profit?

 

[Drmdcpa]

Labor $15
OH and profit $35

You would need to charge $50 to cover cost of labor, OH and profit.

That is very low labor and very high materials costs. No wonder your customer is asking that question.

Average ratio is 30/30/30/10; direct labor/direct materials/OH/profit