Mechanic’s Lien and Profit and Overhead Claims

 In Mechanic’s Lien Law Updates and News

There is no need to specify your exact profit and overhead in a contract–that is your private business.

No state regulates the amount of your profit and overhead.  Basically, it is what the traffic will bear.  However, most states have home improvement contract laws which require you to specify the terms of the contract.  But this applies to the overall contract price and does not require itemization of the exact profit or overhead.

If it is a lump sum or stipulated amount, you do not have to specify your profit. That is your private business.  Sometimes you make money and sometimes you don’t and that is your risk.

Nor do you have to specify the exact profit on T & M or cost-plus.  You may have to specify the hourly rate in a home improvement contract, but this includes a labor burden which in turn encompasses your profit.  So if your raw hourly rate is $55.00 an hour you might charge $75 which covers the burden and the profit–but you don’t have to specify or break it down.

Having said that, small jobs have anywhere from 10 to 25% P and O, medium size jobs between 5% and 10%, a large job 2 to 3%.  This is my experience and I look to others “in the trenches” to make comments as to what they have found.  Good luck. Bernie

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