How do contractors calculate an invoice?

Add labor (hours × rate), materials (quantity × unit cost plus any markup), and other job expenses. Apply a discount if needed, add tax on the discounted subtotal, then subtract any deposit already paid to get the balance due.

What is material markup on a contractor invoice?

Material markup is an extra percentage on top of your material cost. It is the amount you add when charging the customer. For example, a $5 unit cost with 20% markup is charged at $6 per unit.

Can I add multiple labor and material lines?

Yes. Add a separate labor entry for each crew, task, or rate, and a separate material entry for each product or supply. Totals sum all rows.

Is tax calculated before or after a discount?

Tax is applied after the discount, on the discounted subtotal. Confirm the tax rules that apply in your jurisdiction.

What does Create this invoice do?

It opens the Invoice Generator with your labor, materials (at the marked-up unit cost), expenses, discount, tax, deposit, and currency prefilled so you can review and send the invoice.

Contractor Invoice Calculator

Build a contractor invoice from labor, materials with optional markup, and job expenses. Apply a discount and tax, then subtract any deposit already paid.

Currency

Labor

Hours × hourly rate. Add more entries for different crews, tasks, or rates.

Description

Hours

Hourly rate

Amount $600.00

Materials

Quantity × unit cost. Optional markup % is added on top of cost when charging the customer.

Description

Qty

Unit cost

Markup %

Charged $60.00

Additional expenses / fees (optional)

Adjustments

Overall discount

Tax rate (%)

Deposit / amount already paid

Invoice summary

Labor total: $600.00
Material cost: $50.00
Material markup: $10.00
Expenses / fees: $0.00
Subtotal: $660.00
Discount: $0.00
Tax: $0.00
Invoice total: $660.00
Deposit / amount paid: $0.00
Balance due: $660.00
Overpayment: $0.00

Material markup is the amount added to material cost when charging the customer. Create Invoice uses the marked-up unit cost on each material line.

Create this invoice

Ready to send it? Open the Invoice Generator or browse all calculators.

How contractors calculate invoices

Enter labor as hours × hourly rate (add rows for different rates or crews).
Add materials with quantity, unit cost, and optional markup %.
Include permits, travel, or other job expenses.
Apply an overall percentage or fixed discount if needed.
Add tax on the discounted subtotal, then subtract any deposit already paid.

Example: 8 hours at $75/hour is $600 labor. 10 units at $5 with 20% markup is $50 cost + $10 markup. Subtotal $660. With no discount or tax and no deposit, the balance due is $660.

Labor and material billing

Labor is usually billed by time. Materials are billed by quantity and unit cost. Keeping them as separate lines makes it easier for clients to see what they are paying for and helps you track job costs versus markup.

Contractor markup on materials

Markup covers handling, waste, and profit on supplies. Charged unit cost = unit cost × (1 + markup%). The calculator shows material cost and markup separately in the summary, then prefills the Invoice Generator with the charged (marked-up) unit cost.

Deposits and tax

Enter any deposit or progress payment already received. Tax is calculated after discounts. Rules for what is taxable vary by jurisdiction—confirm before you send the invoice.

Frequently asked questions

How do contractors calculate an invoice?: Add labor (hours × rate), materials (quantity × unit cost plus any markup), and other job expenses. Apply a discount if needed, add tax on the discounted subtotal, then subtract any deposit already paid to get the balance due.
What is material markup on a contractor invoice?: Material markup is an extra percentage on top of your material cost. It is the amount you add when charging the customer. For example, a $5 unit cost with 20% markup is charged at $6 per unit.
Can I add multiple labor and material lines?: Yes. Add a separate labor entry for each crew, task, or rate, and a separate material entry for each product or supply. Totals sum all rows.
Is tax calculated before or after a discount?: Tax is applied after the discount, on the discounted subtotal. Confirm the tax rules that apply in your jurisdiction.
What does Create this invoice do?: It opens the Invoice Generator with your labor, materials (at the marked-up unit cost), expenses, discount, tax, deposit, and currency prefilled so you can review and send the invoice.

For time-only billing, use the Hourly Invoice Calculator. For general line-item totals, use the Invoice Calculator. Work out markup or margin with the Markup Calculator and Margin Calculator. Set an hourly rate with the Freelance Rate Calculator. See also invoices for contractors and construction invoicing, or browse Create & Price.