Price it so the tax line is the customer's and the margin line is yours

You wrote a number on a bid form and it felt about right. Then the supply house invoice landed 8.25 percent above the quote you priced off, the crew took eleven days on a job you called eight, and four months after you swept the site the last ten percent of the money is still sitting in somebody else's account. On paper the job made money. Your bank statement had a different opinion.

A price is not one number. It is five piles of cost, one decision about margin, and in Texas a decision about the contract itself that moves the price before you have added a dollar to anything.

Tex. Tax Code s.151.056 reads a single line in your agreement and decides whether you are the consumer of the materials or the seller of them. On new construction and on residential repair and remodel, the labor charge is not taxable at all. So profit parked in the labor line costs your customer nothing in tax, and the same profit parked in a materials markup costs them 8.25 cents on every dollar of it. Same job, same money to you, two different bills.

The second Texas fact is that ten percent of the job is not yours to bill. Under Tex. Prop. Code s.53.101 the owner reserves it through the work and for thirty days after the work under the original contract is completed. Your invoice curve and your cash curve are two different lines, and the price has to carry the space between them.

Five piles, and the one that is not on any supplier quote

Build the number from the bottom. A job cost is five piles, and four of them arrive as paper somebody else wrote. The fifth one is yours to work out once a year and apply to everything.

Take a residential addition as the worked example. It runs through the rest of this page.

The overhead line is the one that gets left out, because no invoice arrives for it. Work it once. Add up a year of rent, insurance, the phone, the accountant, the truck payments, the software, the yard, and your own unbilled hours in the office. Divide that by the direct job cost you expect to run in the year. If overhead is $84,000 and you put $600,000 of direct cost through the business, overhead recovery is 14 percent of direct cost. The four direct piles on this job come to $121,000, so it carries $16,940, the $17,000 on the sheet. Every job carries a share, or the jobs you win pay for the ones you bid and lost.

The vehicle line has a published number behind it. The IRS 2026 standard mileage rate is 72.5 cents a mile through June 30 and 76 cents from July 1. A forty mile round trip, two trucks, ten days, is 800 miles, which at the second-half rate is $608 of real cost that rarely reaches a residential bid sheet. It is a line, not a rounding error.

Name the rentals on the bid. A named rental line survives a scope change; a buried one gets absorbed.

An hour of Texas labor costs more than the wage, and less than you think in payroll tax

The burdened rate is the wage plus everything the wage drags behind it, divided by the hours that actually land on a job.

Texas is unusual here, and it works in your favor on the tax side. Both unemployment bases are small, so the statutory burden caps out fast.

Read that 8.1 percent. The Texas unemployment line is $243 a year at the 2026 entry rate, and $569 at the top of the 2026 experience range of 0.32 to 6.32 percent. That is the whole state bill. What moves your rate is everything after the statutory lines: workers compensation or the occupational accident plan you carry instead, since Texas leaves that choice with the private employer, plus general liability and commercial auto priced off payroll, tools, phones, training, and paid time off.

Then divide by the hours that reach a job. Out of 2,080 paid hours, holidays, rain days, shop time, yard time and travel take a bite. At 1,600 productive hours, $62,980 of wage and statutory cost is $39.36 an hour before a dollar of insurance. Add $6,400 of allocated insurance, truck and tool cost and it is $43.36. The man is paid $28.

That is the number that goes into the labor pile. The full build is in what an hour costs you in Texas, and the contractor hourly rate calculator runs it off your own payroll and your own productive hours.

Markup is not margin, and the difference is a divisor

This is where a contractor who thinks he priced for profit ends up working for wages.

Markup is what you add on top of cost. Margin is the share of the final price that is not cost. Multiplying cost by 1.20 gives you a 20 percent markup and a 16.7 percent margin. To get a 20 percent margin you divide cost by 0.80.

On the $138,000 job cost, a 20 percent markup prices at $165,600 and a 20 percent margin prices at $172,500. The gap is $6,900 on one job, and it is entirely a question of which arithmetic you used. Run both numbers on your own job in the markup and margin calculator before you decide which one your bid sheet has been doing all year.

Price the addition at a 20 percent margin: $138,000 divided by 0.80 is $172,500, carrying $34,500 of gross profit. That contract figure is the input to everything below.

The contract type moves the price before you have added a dollar

Now the Texas layer.

A lump-sum contract carries one price covering the work and the materials. Under s.151.056(a) you are the consumer of the material you incorporate, you pay tax at the counter, and there is no tax line on the customer's bill.

A separated contract states an amount for the labor and an amount for the materials. Under s.151.056(b) you are the seller of those materials. You buy them against a resale certificate and collect tax from the customer, measured on the greater of the price of the materials agreed in the contract or the price of the materials to you.

Read that measure again, because it is the pricing lever. There is a floor, which is your own cost. There is no ceiling, and nothing obliges you to mark the materials up. On new construction and on residential repair and remodel the labor charge is not taxable, so margin carried in the labor line is not taxed and margin carried in a materials markup is.

Same job, same $172,500 contract, same $34,500 of gross profit to you, three ways of splitting the two lines:

A spread of $1,980 on the customer's total, decided by which line you parked the profit in, with your own gross profit unmoved at $34,500 across all three rows. On a competitive residential bid that $1,980 is the whole distance between you and the next number on the owner's desk.

Texas sales tax is 6.25 percent at state level and local jurisdictions stack up to 2 percent on top, so 8.25 percent is the ceiling and the arithmetic above uses it. On a separated contract the local piece follows the job site rather than your shop.

The split pays on new construction and on residential repair and remodel. On nonresidential repair, remodel and restoration the whole charge is taxable, labor included, so quote that work with the 8.25 percent already in the conversation and the invoice lands without an argument attached. The grid of which work on which property gets taxed which way is sales tax for Texas contractors.

Read the tax back into your cost sheet, or it comes out of the margin

Under lump-sum you are the consumer, so the tax is a cost of the job. That means it belongs in the materials pile before you apply any margin.

Run the same addition as a lump-sum contract. $60,000 of material at 8.25 percent is $4,950 that leaves your account at the counter, so job cost is $142,950 and the price that holds $34,500 of gross profit is $177,450 with no tax line on it. The customer's total is identical to the first row of the table above. What changed is the timing and the risk.

The timing: under lump-sum, that $4,950 leaves on the delivery week. Under a separated contract it arrives with the customer's draw. Tex. Prop. Code s.28.002 gives a private owner 35 days from receiving your payment request, so lump-sum has you funding the state of Texas five weeks ahead of the money that repays you.

The risk is the one that costs real money. Bid lump-sum off a supplier quote that excludes tax, price it at 20 percent margin on $138,000, and the $4,950 you forgot comes straight out of the $34,500. Gross profit lands at $29,550. That is a 14 percent haircut on the profit of the entire job, from one figure copied off a quote sheet that said "plus tax" at the bottom.

If you already paid a supplier and then sell those materials under a separated contract, s.151.056(c) credits the tax you paid against the tax you collect. Writing the contract so you do not need that credit is better.

Price for the ten percent that lands after the job is over

Price the job and you have set your revenue. You have not yet set your cash.

Under s.53.101 the owner of a private job reserves 10 percent of the contract price, or 10 percent of the value of the work as it is completed, through the job and for 30 days after the work under the original contract is completed. That is a statutory reserve, not a term somebody negotiated. Your own subcontract may hold a contractual retainage on top of the same money, and the two are claimed by different routes.

Put the addition on a four month schedule and look at what actually arrives.

That $17,250 is exactly half of the $34,500 of gross profit you priced. Working as a sub, the reserve stays out until the original contract closes, months after your scope did, and the 7 day pass-down in s.28.002 puts your share of each draw at day 42 from the owner's receipt, not from the day the general contractor feels flush.

Three things follow for the price. Fund the gap deliberately, because you are the one lending it. Bill on the event rather than on the calendar, so the request is in the owner's hands the week the money left your account. And once retainage becomes payable, it is a payment request like any other, so day 36 starts interest at 1.5 percent a month under s.28.004, which is 18 percent a year and a figure you compute and invoice rather than a late fee you hope they honor.

The two piles and the two notices that reach them are in Texas retainage at 10 percent, and the clocks that turn a slow payer into a priced position are in getting paid in 35 days in Texas.

Write down what the price assumed, so a change is a change instead of an argument

The fight about a quote runs the same script. The customer believes the price included something. You believe it obviously did not. Both of you are working from a conversation six weeks old, and the only document either of you can produce is a number.

Six lines on the quote settle most of it before it starts.

Which drawings, which revision. "Priced from drawings dated June 12, revision 3" turns a later argument into a comparison of two documents.

Exclusions, written once and reused. Concealed conditions behind a wall or under the ground. Work by others you depend on: fire-stopping, patching, permits pulled by somebody else. Making good after your trade, which the customer will read as included unless the quote says it is not. Anything the drawings do not show.

Allowances named as allowances, with the unit and the figure, so a $9 a square foot tile allowance is not read as a tile package.

Unit prices for the extras you already know are coming. Additional footage, a rock clause, a pump instead of a chute, a finish upgrade. A named unit price turns a change order into an approval.

A validity date. Material prices move, and an undated quote is an open offer against them.

The tax election, in the contract itself. This one is specific to Texas and it is the one that gets lost. Separately stated prices in the agreement, or in a document the agreement incorporates such as an itemized estimate or a schedule of values, make the contract separated. Itemizing an invoice afterwards does not convert a lump-sum contract unless the contract requires separated invoices. So the friendly breakdown you attach to a one-price agreement is a tax document as well as a scope document, and it is worth deciding which one you are handing over before you attach it.

The rest of what a general contractor wants in the same envelope is in the Texas bid ready checklist.

Charge for the estimate, because in Texas anybody can bid the job

Texas licenses electricians, plumbers, HVAC and irrigation at state level and leaves framing, concrete, drywall, painting and roofing to the registration desk at the city where the permit gets pulled. That keeps the door open for you, and it keeps it open for the six other numbers the owner collected. A wide bid list is what makes free takeoffs the price of entry.

The way out is to charge for the part with value in it. A load calculation, a panel schedule, a takeoff off a raw set, a layout drawing: that is engineering, and it takes evening hours you are not getting back.

Put it on the quote as its own priced line. "Load calculation, takeoff and layout drawing, credited in full against the contract if the job proceeds." Two things happen the moment it is a line rather than a favor. You stop quietly resenting the work, and the customer sees a number they can say yes to. Name it on the phone before you drive out, and the inquiries that were not going anywhere identify themselves for free.

Credit it against the contract and the sentence closes itself: they are not paying extra, they are paying early.

Take the deposit on the same signature that makes the job collectable

On residential work in Texas the deposit conversation is already scheduled, because a homestead job has a signing that has to happen first anyway.

Under Tex. Prop. Code s.53.254 a lien on a homestead requires a written contract executed before any material is furnished or any labor is performed, signed by both spouses if the owner is married, and filed with the county clerk of the county where the homestead sits. Fifteen minutes at a kitchen table before the first delivery is what makes that job collectable, and that window closes the moment material lands. The deposit rides on the same signature.

Size it off the materials line rather than a round guess. On a separated contract that line already has a number on it, so a deposit covering the material order has arithmetic behind it: the customer is funding their own materials purchase, which is a conversation that goes better than "a third up front".

One more piece of Texas gives that money its shape. Under Tex. Prop. Code s.162.001 construction payments made under a construction contract are trust funds. When a general contractor explains that your money is spread across three other jobs, that is a description of trust funds, not a cash flow strategy, and it is worth saying out loud on the call.

Put your next number together

The method is short enough to run on one job this week. Build the five piles with the burdened rate in the labor line and the overhead share in its own row. Divide by one minus your margin instead of multiplying by one plus your markup. Decide in the contract whether you are the consumer or the seller of the materials, and if you are the seller, park the profit in the labor line where Texas does not tax it. Then price against the cash curve, because ten percent of it arrives after the job is over.

AEC Stack carries that election through to the bill, so the tax line appears where the contract says it should, at the job site rate, and the reserved ten percent shows on the job as its own dated receivable instead of a vague idea about closeout. There is no monthly subscription. The platform fee is 2.5 percent of each invoice processed through the platform, taken on the payment due date.

Run your own job through the markup and margin calculator and your own payroll through the contractor hourly rate calculator, then set the contract election with the grid in sales tax for Texas contractors. When the number is ready, find work is the feed of Texas projects with a name, a date and somebody to call on them.