Most Ottawa homeowners have no idea what their general contractor actually marks up on materials, labour and subcontractors — and that knowledge gap is where money quietly leaks out of a renovation budget. Markup is not inherently bad; it funds the overhead, coordination, warranty and profit that keep a legitimate business running. The problem is hidden, excessive or stacked markup that you never agreed to. This guide breaks down 2026 Ottawa GC markup norms category by category, separates reasonable margins from predatory ones, exposes the most common hidden-markup patterns, and shows how to n...
Typical 2026 Ottawa markups: materials 15-25% (lower on high-cost items like cabinets or appliances, higher on low-cost consumables). In-house labour carries a 35-65% loaded burden that simply covers the cost of employing the worker — WSIB, EI, vacation pay, tools, vehicle and overhead — with profit added on top of that. Subcontractor labour is marked up 15-25%. Permits and design fees are usually passed through with a 5-15% coordination charge. The total project markup, often called overhead an...
Cost-plus billing is fair only when every receipt is shared and the markup percentage is disclosed in writing up front. A predatory cost-plus contract hides receipts behind claims of confidential supplier pricing, leans on undisclosed supplier kickbacks, and applies a fresh markup on top of already-marked-up subcontractor invoices. Protect yourself by writing four conditions into any cost-plus contract: all receipts shared monthly, supplier identities disclosed, the GC markup percentage stated e...
The contract type changes the markup math. In a lump-sum (fixed-price) contract the GC carries all the risk and prices accordingly, so the effective markup typically runs 22-32% because it includes a contingency buffer. In a cost-plus contract with a capped markup, the effective markup is lower — 15-22% — because the GC takes less risk. Lump-sum is the better choice when the scope is well-defined and surprises are unlikely. Cost-plus is better for older homes with high discovery risk, where a lu...
The costliest markups are the ones you cannot see. Watch for: trade pricing that is actually retail plus a markup; cabinet or finish allowances set 30%-plus below real cost so you blow the allowance and pay the overage at full markup; subcontractor invoices marked up by the sub and then again by the GC; padded change orders priced at 25-40% markup versus 15-25% on the base contract because there is no competitive bid; and cleanup, protection or site-management line items pulled out and double-co...
Allowances are the most common way markup hides in plain sight. A contractor sets a low allowance for cabinets, tile, countertops or appliances to make the headline quote look competitive, knowing the real selections will cost far more. When you overspend the allowance — which you almost always will...
It helps to remember what honest markup actually buys. A GC's margin funds estimating and bidding time, project scheduling and trade coordination, site supervision and quality control, material procurement and delivery logistics, permit administration, insurance and WSIB compliance, warranty service after completion, and the profit that keeps the business solvent enough to still exist when you need warranty work two years later. A contractor charging 0% on subs or claiming to work at cost is not...
You cannot negotiate what you cannot see, so start by requesting line-item quotes from three contractors rather than lump sums. Ask each to state their markup percentages on materials and subs explicitly. Negotiate the things that matter most: cap change-order markup at the base-contract rate in writing, require allowances to match researched market costs, and for cost-plus structures demand shared receipts and audit rights. Do not simply hammer the margin to zero — a contractor squeezed below s...
Markup is added to cost — a $100 item at 25% markup bills at $125. Margin is profit as a share of the selling price — that same $125 item carries a 20% margin. Contractors quote markup; accountants track margin. Focus on the all-in price for a defined scope rather than a single percentage in isolation.
Industry standard is 15-25% on materials and subs, and 15-30% total project markup (overhead plus profit). Anything above roughly 35% effective markup is high, while below 12% suggests the contractor is inexperienced or has relocated the padding to another line in the quote.
Compare three line-item quotes. If one contractor's material costs run 25%-plus higher than the others, they are either using premium suppliers — which you can verify — or padding markup. Insist on transparent material and subcontractor pricing in writing before signing anything.
Change orders typically carry 25-40% markup versus 15-25% on the base contract because there is no competitive bid and the contractor knows you cannot easily switch mid-project. Cap change-order markup at the base-contract rate in your contract before work begins to neutralize this.
Sometimes. Cost-plus eliminates the GC's risk contingency, potentially saving 8-15%, but only if the markup is transparently disclosed and capped, supplier identities are shared, and you hold audit rights. Without those terms, cost-plus frequently ends up costing more than a fixed-price contract.