How to Include Profit & Overhead Costs in Renovation Project Estimates

Grow your contracting business and stand out from the competition: use Sweeten’s guide to include profit & overhead in your bids

profit and overhead in renovation project estimates

Estimating overhead and profit are important parts of any project bid. However, underestimating overhead costs on a project often cuts into the profit. Sweeten outlines how to manage the cost of your business within a renovation project estimate.

Sweeten matches general contractors with high-quality home renovation projects, vetted for readiness and appropriate budget. Contractors pay only when they win a project. Budgets start at $15,000 and average over $100,000.

How does Sweeten work with general contractors?
  • Sweeten matches general contractors with high-quality home renovation projects, vetted for readiness, and appropriate budget.
  • Contractors pay only when they win a project.
  • Budgets start at $15,000 and average over $100,000.

Project Estimating Tip 1: Estimating Overhead

Indirect overhead

Ongoing, or indirect, overhead items keep a business running long term.  There are a number of indirect or ongoing costs. These may include: 

  • Salaries and benefits for employees
  • Office costs, such as rent, utilities, supplies
  • Vehicle costs
  • Insurance
  • Marketing costs, including Sweeten fees
  • Professional services including accountants, attorneys
  • Software licenses

Think of these expenses as the “cost of doing business” as they allow you to get in the game and operate a successful business. For that reason, many general contractors spread these costs evenly over a number of projects by incorporating them into their overhead and categorizing them as marketing. Others build it into their overhead on a project to project basis. It’s a key decision a contractor needs to make when they’re running their business. Ultimately, it’s a personal decision! The important point is to treat these fees as business expenses, and not as a reduction in profit.

Direct overhead

Direct overhead costs are costs for specific projects. Here are some examples:

  • Equipment rental
  • Job site utilities
  • Additional insurance, when required
  • Manpower for non-labor charges, such as accepting deliveries and ordering materials
  • Project marketing expenses
    • For example, the fees for Sweeten’s services provide business development and marketing, opportunities for free photography/blog and social media promotion, peace of mind, and consumer protections for clients that are designed to help our GCs win.

Include anything that does not fall under materials or labor that affects the project.

Project Estimating Tip 2: Presenting P and O Estimates

Some contractors lump profit and overhead costs together. However, separating the two offers an opportunity for the contractor. Most clients don’t understand the expenses of running a business. Many people assume the profit and overhead number is mostly profit—and they will try to get the GC to reduce it. Separate the two, and it could lead to a better understanding of what is behind the estimate. It explains the cost of doing business.

One helpful strategy is to list some of the overhead items that benefit the client.  They will appreciate the transparency and help them understand what they’re paying for. Offering this could separate the contractor from other firms bidding on the project. The client should know if the GC will purchase more insurance or special equipment to make the project successful. 

Project Estimating Tip 3: Estimating Profits

Many GC’s use a standard profit percentage for their renovation project estimates. It is a fairly common practice for GCs to increase or decrease the percentage based on different job factors. A contractor might reduce their profit margins if it looks like the project will run very smoothly. Perhaps a client already has materials on-site, so changes or delays due to delivery issues are unlikely. Some of Sweeten’s GCs will give a small discount on profit to lock in the job.

However, the reverse is also true! Projects that appear more difficult for some reason. For example, projects where the clients have a difficult time making decisions and you anticipate delays.  Those types might include a higher profit margin in the bid. This will give you a cushion to fall back on when problems crop up. 

Project Estimating Tip 4: Change Orders and Options

Changes happen on many projects. Account for your cost by including profit and overhead items in the change order procedure. Above all, be sure to be upfront with this practice in the initial contract you sign with the client.

The same is true if options, or add-ons, are included in the estimate. Include the profit and overhead in the renovation project estimate for the add-on. In those cases, the profit and overhead are combined with the estimated costs. 

Beat the competition with fair, profitable renovation project estimates

We hope our guide to adding profit and overhead costs to your renovation project estimates was helpful! Knowing how to do this strategically is a crucial step in growing your contracting business.

An often-overlooked tool to help grow a contracting business? Social media. Sweeten gives an easy-to-use social media guide to creating or updating your accounts for maximum effect.

Sweeten matches general contractors with real renovation projects that have a minimum budget of $15,000 (and Sweeten contracts only pay when they win a project!) Learn more about Sweeten’s working relationship with general contractors.

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Aging in Place Design Costs & Tips to Improve Home Accessibility

Sweeten explains aging in place design costs, plus accessible design costs (and how to add them to a home!) 

(Above) Marissa + Jeremy installed bright lights for future aging in place in their kitchen remodel

What is aging in place design? What does accessible design mean?

To some, “aging in place” is a design term that means creating living spaces that are safe and accessible for people who want to stay in their homes and care for themselves as they grow older.

To others, the term “accessible design” or “living in place” is more applicable, as it means designing spaces that suit the needs of children and adults in one home. In both cases, the goal is to create living spaces that are, safe, accessible, and also make design sense.

Sweeten gives an overview of aging in place design costs, plus costs for accessible designs, and gives tips for when these designs can be beneficial to the family lifestyle. Sweeten matches home renovation projects with vetted general contractors, offering advice, support, and financial protection—at no cost to the homeowner.

How much does accessible design cost?

When part of a major renovation, the cost to include accessible techniques can be minor. “Things don’t necessarily need to cost more, they are just different,” said Julie Schuster of Julie Schuster Design Studio and is a certified living in place professional (CLIPP). “If you are remodeling a kitchen you probably want under cabinet lighting. Why not upgrade slightly to add bright LED lights that are good for aging eyes?” 

There are two approaches to accessible living spaces: 

  • Remodel to suit the urgent needs of the homeowner.  A wheelchair user will need, among other things, wide doorways and hallways, and a curbless shower with a bench and grab bars. A family with young children may want night lights in the hallways, non-slip bathroom floor tiles, and anti-scald shower valves.
  • Remodel to make the design flexible for future improvements. “It is important to learn the things that could crop up in the future and then design backward for them. I install blocking behind a shower wall while renovating, so grab bars or a built-in bench can be added later. Putting in the blocking does not add to the overall cost,” said Kammi Reiss of Kammi Reiss Design.

For Sweeten contractor Aaron, being flexible in design is key. In one condo project, they placed a removable panel in front of the kitchen sink so a wheelchair user can roll up to the sink for use. 

What does aging in place cost?

While many accessible design techniques have similar costs as any renovation project,  some projects do have an increased cost. For example, the combination of slippery surfaces and a wet setting in bathrooms often cause accidents, especially for people with mobility issues or poor eyesight. 

Here’s a comparison from Remodeling’s 2020 Cost vs. Value Guide that compares a standard  5-foot by 7-foot bathroom of mid-range quality to an accessible one of the same size. The accessible bathroom includes 36-inch-wide doors, flat panel electric switches installed at sitting level, walk-in curbless shower with fold-out seat, adjustable shower head, thermostatic mixing valve, LED lighting, ceramic tile walls with contrasting color stripes, towel bars (grab bars) that can support 250 pounds each, night lights, and reconfigured storage accessible to someone in a seated position, among other items.

Here’s an example of what universal design can recoup at resale at a national level.

aging in place

Remodeling asked us to revise the remodeling project for them,” said Louie Delaware, co-founder of the Living in Place Institute. “Everyone assumed that it would cost much more and would not be worth as much.”  While there are increased costs, the return on investment is similar to that of the accessible bathroom. 

Costs for accessible design projects:

Here are some estimated costs for common projects often associated with accessible designs:

  • Entrance ramp: $1,300 to $ 3,500
  • Door widening to accommodate wheelchairs: $400 to $800, each
  • Chair lift: $3,000 to $6,000, curved stairs will cost more
  • Widening hallways (often includes moving plumbing, heating and cooling and electrical lines):  $500 to $2,000
  • Grab bars with decorative finishes: $100 to $200, each
  • Curbless showers: $2,000 to $8,000
  • Faucets with lever controls: $200 to $400

Many of the techniques used in accessible design or aging in place design are the same, whether planning for yourself, someone who wants to age in place, or to suit the needs of a growing family. The goal is to create a safe, accessible design for everyone to enjoy.

Read how aging in place and living in place can bring ease to day-to-day living for every family member.

Sweeten handpicks the best general contractors to match each project’s location, budget, scope, and style. Follow the blog, Sweeten Stories, for renovation ideas and inspiration and when you’re ready to renovate, start your renovation with Sweeten.

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Why Wallpaper is Easier Than Ever

New techniques, ease of use, and if wallpaper can hang in bathrooms

wallpaper, renovation, foyer, Kensington, entry(Above) Wallpaper in Barbra + Sean’s foyer

More and more designers, contractors and homeowners believe that one of the best ways to make a bold design statement is to opt for wallpaper over paint. It provides hundreds of looks and textures that a regular paint job can’t match. And while more expensive than traditional paint,  wallpaper is usually less expensive than hiring a painter to create a decorative surface. 

Sweeten, a free renovation platform that matches homeowners with licensed general contractors and tracks their projects, shows why this covering is gaining in popularity.

Improved techniques

Although wallpaper has been around for years, there are a few reasons for its resurgence in popularity.  For one, people who grew up with wallpaper may have soured on it, but thanks to new printing and manufacturing techniques, manufacturers are producing dozens of new colors, designs, and textures, sparking a renewed appreciation for the product.  “Wallpaper has become much more interesting, ” said Sweeten designer  Tina. “It’s not your grandmother’s wallpaper anymore. Even if you are going for a minimalist look, a textured wallpaper adds so much more than flat paint to a room.”

Homeowners are increasingly asking for wallpaper in their homes. Tina tells how one of her clients already had wallpaper picked out for one of the rooms before they even met to discuss the project. “People are much more receptive than they used to be,” said Tina ” One reason may be that they see so many design ideas on the internet where in the past you could only see ideas in magazines. There was no option to see the world quickly.” 

(Above) Jessica + Alex’s textured wallcovering; Brooke + Sam added floor-to-ceiling patterns to both bathrooms

Some of the types of designs that are getting noticed include 3D papers where the design seems to pop off of the wall, gradient papers where the colors and designs transition from floor to ceiling, metal looks, and geometric shapes. Custom printed wallpapers are also available. There are services that allow you to upload a photo or some other design you’ve created and have it turned into wallpaper.

Where to use wallpaper

Most designers use it in the main living areas: living room, dining room, and bedrooms. Some use it on an accent wall to make a bold statement. Others cover all of the walls, some even use it on ceilings. 

The use of wallpaper in bathrooms is a matter of contention among designers and contractors. “I don’t like to use it in full bathrooms because of the moisture problems,” said Sweeten contractor Ilya. “I’ve seen people put it in the shower area. I personally would not do that.” It should be noted that some wallpapers are designed for use in high-moisture areas.

Ilya has used wallpaper in powder rooms. In a recent remodel in Red Hook, the client “chose a bold print wallpaper that brings the whole space to life,” he said. The wallpaper has a white background with a large green floral print. The powder room has matte back accessories. 

Designer Tina does not use it in bathrooms because she prefers to utilize tile that runs up to the ceiling. “But I do like it in powder rooms to create a jewel-box effect,” she said. 

Working with wallpaper

Another reason for the increased popularity is that today’s products are easier to work with than older versions. “It’s still an art form to hang wallpaper correctly,” said Ilya. “But it is easier than it used to be and it is also easier to match patterns.” 

Depending on the product, wallpaper comes prepasted, and soaking the sheets in water activates the adhesive. Another method is to apply adhesive to the paper or directly to the wall. Spreading adhesive on the wall tends to be less messy than brushing it on the back of the paper and then transferring the sheet to the wall.

Many papers are listed as strippable or peelable, meaning it is easy to get them off of the walls when it is time for a change. Ilya says that when you do remove the wallpaper, it is necessary to skim coat the walls before painting. If new wallpaper is called for, you should remove all of the old adhesive and prime the wall. 

Types of wallpaper

Wallpaper is made from a number of materials, but some form of vinyl is the most common. The material is durable, easy to keep clean, and many vinyl papers are easy to remove. There are a number of products that contain vinyl in some way.

  • Solid vinyl – This thick paper consists of a solid layer of vinyl laminated to a paper or fabric substrate. This is the most durable of vinyl-containing products.
  • Vinyl coated fabric – Liquid vinyl coats a fabric base, making the wallpaper breathable.
  • Vinyl coated paper – A liquid coating is applied to a paper base. These papers are easy to clean and remove, but not as durable as a solid vinyl paper.

(Above) Laura + Randy’s entryway, Mitzie + Jenifer’s foyer, Brooklyn Heights Designer Showhouse powder room, Barbra + Sean’s ceiling, Nazli + Larry’s powder room

Other types of wallpaper include:

  • Non-woven paper – This is a combination of natural and synthetic materials similar to those used in making tea bags and coffee filters. It is durable, washable, tear-resistant, and breathable.
  • Grasscloth – Natural materials like hemp or seagrass are woven with cotton and attached to a natural backing. These papers offer striking designs, but they are difficult to hang and keep clean. Best for low traffic areas.
  • Flock wallpaper – In this product, a material, such as wool or rayon, is applied to an adhesive backing, creating a raised design. The distinctive designs are difficult to clean and best left to low-traffic areas like bedrooms and formal living rooms.
  • Metallic wallpaper – These foil products contain aluminum or some other metal added to the surface of the paper. Available in solid metallic colors, such as gold, brass, and copper or in geometric and other designs. A specialized application is usually required.

Wallpaper, even a small installation, can go a long way. With its various patterns, colors, and tactile designs, consider it as a decorative accessory that lends a pop of texture. 

Sweeten founder and CEO weighs in on what to know before renovating a brownstone.

Sweeten handpicks the best general contractors to match each project’s location, budget, scope, and style. Follow the blog, Sweeten Stories, for renovation ideas and inspiration and when you’re ready to renovate, start your renovation with Sweeten.

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