Question:

I have a job item with a cost of $3500 and a markup of 25%, which should equal $4375 after makup. But the program is showing $4666.67. Why?

Answer:

Smart Contractor provides two different ways to compute job markups. To set the markup calculation method, go to the prompt for "Markup Calculation Method: " in the "Setup" > "Job Options" menu option. The two options are:

• As a percent of job cost. In accounting terminology, this is considered the job markup, since the markup amount is based on the job cost. For example: If the job cost = $100.00, then a 20% markup would result in the job price = $120.00, which is calculated as $100.00 + ($100.00 * .20).
• As a percent of job price. This is considered the job margin, since the margin amount is based on the job price (after adding markup). For example: If the job cost = $100.00, then a 20% margin would result in the job price = $125.00, which is calculated as $100.00 + ($125.00 * .20).

WeI looked in the Setup > Job Options menu option in your database, and the "Markup Calculation Method: " is set to calculate markup "As A Percent Of Job Price". That is why the $3500 item is getting marked up to $4666.67 instead of $4375.

If you want the marked up amount to be $4375, you have two options. One is you can change the markup on that item (or the whole job) to 20%.

The other option is to leave the markup percent at 25%, but change the Markup Calculation Method to "As A Percent Of Job Cost". BUT IF YOU DO THAT, PLEASE NOTE: That will change the customer price for the entire job - and for all other jobs. That would be OK, because you can still go and change the markup for the whole job to set the.

Since you are just getting started creating jobs, the thing to do here is to decide which way you want the program to work based on which way you think of markups. Since you were thinking the 25% markup on $3500 should equal $4375, that means you are using the markup as a calculation of cost, so you should select that option in the markup calculation method. But when you do, then you will need to go and change all of the markups for that job to 33.33% so that the job total will come out to (close to) what it was. I say "close to" because 25% margin actually equals 33.333333333...% markup, and since Smart Contractor only accepts markup percentages to 2 decimal places, the calculated markup will be a few cents less (on each item, which will add up to dollars for the whole job).