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HOME BUIILDERS SOUTH EAST MELBOURNE

+03 8201 7125

Building Across Melbourne

build@eltcon.com.au

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The Stages of Building a Custom Home: A Client's Journey
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Understanding Builders’ Margin

How do you know if your quote is accurate?
The builders’ margin is the percentage added to the cost price of a building project, and its magnitude can differ among builders, contingent on the business size or the type of building service rendered. This margin encompasses all operational costs of the business, including the builder’s profit.

Dispelling Common Misconceptions

Misunderstandings about builders’ margins often arise due to:
  • Lack of transparency in some building quotes.
  • Non-disclosure of margins in typical circumstances.
  • Fluctuations in margins throughout the project, wherein a builder might charge a higher margin for a renovation than for a new build. Additionally, specific project components may attract different margins.

Range of Building Margin Percentages

In the realm of residential construction projects, building margins typically fluctuate between 15% to 25%, based on experience:

  • Lower margins are commonly associated with smaller-scale builders with reduced operating costs or projects featuring straightforward logistics.
  • Higher margins may reflect larger company overheads, intricate management structures, and complex building logistics.

Small Builder vs. Larger Building
Company Dynamics

A small general builder, overseeing one or two projects personally and without additional staff like a site foreman or office administrator, can often manage projects with a 15% margin. Conversely, a larger building company managing multiple projects concurrently may require a specialised team, including site foremen, project managers, office administrators, and on-site offices, contributing to an additional 10% on the general builder’s cost.

To make informed decisions as a client, trust in your builder and confidence in their quoting process are imperative. This trust is only possible when engaging an experienced, reputable builder who maintains transparency in both their quoting process and documentation.