If your estimate markup is too low, what might you risk?

When the estimate markup is set too low, it can lead to insufficient financial coverage for the project's overall costs. The markup is essentially a percentage added to the direct costs to account for overhead, labor, and profit. If this markup does not accurately reflect the costs or is intentionally kept low to win a bid, you risk not being able to cover all expenses involved in the project.

As a result, the company might face a situation where, despite investing time and resources into the project, the income generated falls short of the actual costs incurred. This scenario could ultimately lead to breaking even or, worse, incurring a loss, as the revenue collected would not be enough to cover all expenses, including materials, labor, and indirect costs like overhead or administrative expenses. Understanding the implications of setting a proper markup is critical for maintaining financial health in contracting work.