How Much Should I Charge?:
Pricing Basics for Making Money Doing What You Love

By Ellen Rohr
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While she never uses the phrase ‘Capacity Based Markup’ in plain simple language that anyone can understand Ellen Rohr lays out and explains the mechanics of setting a price for your work using what is essentially a ‘Capacity Based Markup’ methodology.

Also I highly recommend her companion book:

Where Did The Money Go?- Easy Accounting Basics for the Business Owner Who Hates Numbers

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It a great book for gaining a simple understanding of the accounting basics as contractors we often seem to skip over when we first go into business and don’t really pick up on or get interested in until we’re inspired by a crisis.

Running a Successful Construction Company

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Running a Successful Construction Company by David Gerstel is considered by many to be a seminal classic book on running a building and/or remodeling contracting business in addition to giving us a great explanation and the definitive phrase "Capacity Based Markup".

Is in Chapter 5; Estimating and Bidding, and more specifically on pgs 167 through 168 that Gerstel talks about using what he calls a “Capacity Based Markup” which is the same thing as what is otherwise known as a PROOF or Indexed or Labor Allocated Markup which Irv Chasen, Ellen Rohr, and I all talk and write about and why it’s a safer better bet for a new contractor with a varied mixed of projects to use.