What Markup Really Means — And Why It Matters

Most builders won’t talk about this. In fact, many don’t fully understand it themselves.

When you hire Porchlight Builders you’ll receive a construction estimate filled with detailed line items — framing lumber, excavation, windows, insulation, roofing. What you won’t see broken out anywhere is a line for “overhead” or “profit.”

And yet, those costs are baked into every single estimate. They have to be.

Each 2x4 in your framing package, each hour billed for electrical work — they all carry a small portion of the builder’s markup. This markup isn’t mysterious or greedy. It’s what makes the business run. Without it, the lights don’t stay on. The trucks don’t move. The calls don’t get answered.

Many consumers look at markup and assume those dollars are pure profit — money going straight into the contractor’s bank account. But here’s the truth: you’re about to get a rare, behind-the-scenes look at what it really costs to run a successful construction company.

General Overhead: 15–20% of Markup

This is the silent machine in the background — the cost of simply showing up professionally, day in and day out. Overhead covers:

• General liability insurance (protecting you and us)

• Vehicle costs (fuel, maintenance, insurance, and truck payments)

• Office expenses (utilities, phone service, internet, software subscriptions)

• IT infrastructure and equipment

• Legal and accounting fees

• Licensing, continuing education, and safety training

• Bookkeeping and administrative labor

• Workspace rent, equipment storage, or leased yard space

• Permitting, compliance, and regulatory costs

These are the costs that don’t appear on your jobsite — but are absolutely essential to running your project smoothly.

Wages & Benefits: 60–70% of Markup

Porchlight is a people-first company, and the majority of our operating budget reflects that. We pay competitive wages to keep skilled craftspeople and professional support staff on our team. We also cover:

• Health insurance (purchased at full price on the open marketplace for a small team — a major cost)

• Payroll taxes, unemployment insurance, and workers’ comp

• Paid time off and sick leave

• Training, professional development, and certifications

• Time spent planning, coordinating, sourcing, and solving problems — all before and after what you see on-site

Marketing, Tools & Equipment

We reinvest into our business so we can continue to serve at a high level. That includes:

• Maintaining high-quality tools and replacing them when needed

• Investing in field equipment to improve efficiency and jobsite performance

• Building relationships and visibility through marketing and community outreach

• Ensuring our digital tools (like project management software and CRM systems) make your experience smoother

Profit: The Small Slice That Keeps Us Strong

What remains — after all these fixed and variable costs — is profit. But we don’t cash that out and call it a day.

Profit is retained in the business so we can:

• Manage cash flow during large material purchases or slow billing cycles

• Absorb bumps in the road (weather delays, supply chain issues, client changes)

• Stand behind our work, including handling warranty issues long after the final invoice

• Continue building responsibly, with stability and accountability

Why It Matters to You

Running any small business is a challenge. Running a contracting business is even trickier. It’s a hybrid of material procurement, service delivery, and logistics — all built on a foundation of technical mastery. But that’s not enough.

The reason many construction companies fail isn’t because they don’t know how to build. It’s because they don’t know how to run a business.

At Porchlight, we do both — exceptionally well. Our team brings years of hands-on construction expertise and years of executive-level management experience. That means you get a team who can anticipate problems, tailor solutions, and run your project with clarity, care, and professionalism.

We don’t just build beautiful homes. We build a business that stays strong for the long haul — so that we’re here whenever you call on us.