After 21 years in business, it is a rare occasion when potential clients ask about our markup. When they do, I tell them that we shoot for a 10% profit on every project and that sometimes we achieve the 10% and sometimes we don't. Along with that, I tell them we have overhead costs that are required for us to stay in business. I also mention that costs will be fairly equal among similar professional remodeling companies — we all have similar costs of doing business, assuming we are operating ethically and professionally.
If clients are going to nitpick and pry into something they know little or nothing about, then what else are they going to pick apart once the project is under way? Educating clients about products and the process of remodeling is a difficult and time-consuming endeavor in its own right. Attempting to educate them on how your business runs is a wasted effort. My advice would be to do yourself a favor and walk away from the client who is too curious about how you run your business. Their focus won't parallel with yours, if price is their focus.
Total Living Construction
We're never asked that question because we are so straightforward about our costs and margins. When we give customers a proposal, we back it up with an attached five-or six-page spreadsheet showing a detailed breakout of our direct job costs. The proposal cover sheet shows this dollar amount, the added amount for overhead and profit, and the final price.
We have always done this because we recognize that by nature people desire to make informed decisions, especially in the D.C. metro area, where so many individuals are involved in budgetary decisions in their professional lives. They just seem to have a need to know.