Cost of materials and sales tax; cost of labor, fuel costs, incidental costs, permit costs, labor burden costs (WC and payroll taxes) all totalled up along with any costs peculiar to your business and market.
Add in you profit margin plus your overhead as some sort of percentage of the preceding items.
Your GL costing formula will be based on how you are charged by your GL carrier. Is it based on your labor payroll or based on your gross sales? Depending on how they charge you, you will add in payroll based GL in the first section as a line item.
Or, if you are charged on gross sales, you will divide your “almost” sales price (all of the stuff previously mentioned but without payroll based GL) by the percentage rate your GL carrier charges you, inclusive of GL sales tax, stamping fee and the other “extras” your GL carrier charges above and beyond your actual rate per $1000 of GROSS sales. Then, in this 2nd GL insurance cost model, you will have your final sales price.
Remember, if you pay GL on a gross sales basis, the percentage rate they charge you will come right off the top.
Example: All costs and mark up / margin equals $10,000.00 and you pay on a gross sales basis and that basis is, say, 2% then take $10,000.00 and divide by 1.00 - 0.02 (98%) and your ultimate sales price is $10,000.00 divided by 0.98 OR $10,204.08.
Now you owe 2% of $10,204.08 straight off the top to your GL carrier. 2% of $10,204.08 is $204.08 and that leaves you with $10,000.00 to pull off the job. Don’t multiply $10,000.00 by 1.02 to get $10,200.00. You’ll still have to pay the GL carrier 2% of $10,200.00 which is $204.00. Now you have $9,996.00 to pull the job off.