How to price a T&M ticket so the number survives review

Most subcontractors can tell you what their T&M rate is. Very few can show where it came from. That is the whole problem: a rate nobody can break down is a rate a GC’s project manager can cut, and they will, because cutting an unexplained number costs them nothing.

A T&M price is a buildup, not a guess. Here is what belongs in it, in the order a reviewer will take it apart.

The numbers below are round and invented, used only to show the shape of the arithmetic. Yours come off your own payroll register, your own comp rates and your own contract.

The real deliverable is the rate schedule, not the ticket

The best time to settle T&M pricing is at contract execution, before any number is attached to an argument. Get a schedule into the subcontract that states:

• Hourly billing rates by classification — foreman, journeyman, apprentice, operator, whatever your trade and agreement use.
• How overtime and doubletime are billed.
• Material markup, as a percentage of invoice cost.
• Equipment rates, by hour or by day, for the equipment you own.
• Markup on rented equipment and on lower-tier subcontractors.
• What the hourly rate already includes, so nobody argues about small tools twice.

Do that, and pricing a ticket stops being arithmetic and becomes lookup. Your foreman hands over a calculation off a document the GC already signed, instead of a proposal. Skip it, and you will negotiate markup on every ticket for the length of the job — usually at the worst moment, after the work is already done.

Labor: build the burdened rate

The base wage is less than half the story

An hour of field labor costs you well beyond the wage. The costs that ride on every hour:

• Base wage, at the classification you actually sent.
• Payroll taxes — the employer side of FICA, plus federal and state unemployment.
• Workers’ compensation, at the class code for the work. This is the line that varies most by trade, and the one subs most often forget to update when their experience modifier moves.
• General liability, which is commonly rated on payroll.
• Fringes and benefits — union package or your own health, retirement and PTO.
• Small tools and consumables, if your rate schedule says the rate covers them.

Add those to the wage and you have a burdened cost per hour. That is your cost, not your billing rate.

A worked buildup

Take a journeyman at a $38.00 base wage. Stack the burden:

• Payroll taxes at 9% of wage: $3.42
• Workers’ comp at 11% of wage: $4.18
• General liability at 3% of wage: $1.14
• Fringes and benefits: $9.50
• Small tools and consumables allowance: $1.00

Burdened cost: $57.24 per hour. Apply whatever overhead and profit the contract allows — say 15% — and the billing rate is $65.83, which you would publish in the schedule as a round $66.00.

That last step is the one to be careful about. $38.00 to $66.00 looks outrageous to someone who has never run a payroll, and your GC’s PM has seen rate sheets that were outrageous. The buildup is your defense. Show the five lines and the number stops being a markup and becomes a cost.

Bill the classification you actually sent

If you sent a journeyman because that is who was on site, bill a journeyman. If you sent two apprentices, bill two apprentices. Classifications that drift upward on tickets are the fastest way to lose credibility on all of them — one caught ticket and every other ticket on the job gets read with suspicion.

Overtime and doubletime

Price the premium, not a premium rate invented on the spot. The common and defensible approach is to bill the straight-time rate for all hours, then add the overtime premium portion of the wage, burdened for the taxes and insurance that ride on it. Whether overhead and profit apply to the premium is a contract question — so put the answer in the contract.

What is not defensible is quietly running every ticket at 1.5x because the work happened to be after hours. If the crew was already on site in their normal shift, those are normal hours.

Supervision, travel and paperwork time

Foreman time spent directing extra work is a real cost of extra work. So is travel, if the job is remote and the contract allows it. So is the hour someone spends writing the ticket and the as-built.

These are legitimate and they are also the first lines a reviewer strikes — because they are usually not in the rate schedule. If you intend to bill supervision at a percentage of ticket labor, or travel at a rate per trip, say so in the schedule before the job starts. Otherwise expect to absorb it.

Material: invoice cost plus the agreed markup

Material is the simplest part and the one that most often triggers a cut.

• Price at invoice cost, and be able to show the invoice. Not catalog, not list, not last job’s number.
• Add the markup the contract states, as a percentage. One markup, on the cost.
• Freight and delivery are a cost of the material. Include them in the cost base if the contract allows, and name them as their own line so nobody thinks you buried them.
• Do not double-dip. If small tools and consumables are already inside your burdened labor rate, they cannot also appear as material. Reviewers look for this specifically, and finding it costs you far more than the tape and blades were worth.
• Restocking and returns. If the extra work left you with material you cannot return, that is a real cost — but only billable if the ticket says so at the time, with the quantity.

Equipment: owned, rented, and sitting still

Owned equipment gets billed at the rate in your schedule, by hour or by day. The rate should reflect ownership cost — depreciation, maintenance, insurance — not a rental-house list price, because a GC’s PM can look up rental rates in thirty seconds.

Rented equipment is invoice cost plus the contract markup. Attach the rental invoice. If the rental covered three days and one of them was your extra work, bill one day and say so.

Standby and idle time is the argument nobody prepares for. A lift already on site that sat on your extra work for three hours is a cost, and it is billable if your schedule has a standby rate. If it does not, you are asking for money the contract never promised. Add a standby line to the schedule up front.

Delivery and mobilization of equipment brought in specifically for the extra work is billable too, with the ticket noting what came and when.

Lower-tier subcontractors and rented crews

Pass the invoice through at cost and add the markup tier your contract allows — this is often lower than your material markup, and often on a sliding scale that steps down as the amount grows. Read the clause before you price it.

The rule that saves arguments: no markup on markup. If your lower-tier sub already added their own overhead and profit, your markup goes on their invoice total once, at your tier. Stacking full markup on a marked-up invoice is the single fastest way to get a whole T&M package sent back.

What gets a ticket cut

In rough order of how often reviewers catch it:

1. Round numbers. “8 hours, $1,200” with no classifications, no rates, no breakdown. Nothing to verify is nothing to approve.
2. Rates that do not match the schedule in the contract. Even a dollar off reads as an attempt.
3. Markup on markup, on rented equipment or lower-tier work.
4. Consumables billed twice — once in the labor burden, once as material.
5. Classifications that do not match who was on site, when the daily log says otherwise.
6. Equipment stacked on labor hours — a lift billed for ten hours on a day the crew logged six.
7. Supervision, travel or paperwork time that appears for the first time on the ticket.
8. No invoice behind the material, two months later, when it is asked for.

Every one of those is avoidable with a rate schedule and a ticket that shows its work. For the rest of what makes a ticket hold up — who directed the work, the signature, the photos — see T&M tickets in commercial construction.

Rates age

A rate schedule written in year one of a three-year job is wrong by year two. Wages move, comp rates move, your experience modifier moves.

Two fixes, both set up front: an annual escalation clause in the rate schedule, or rates that reset each contract year off a stated basis. Either is far easier to agree before the job than to argue mid-job. And whichever you choose, re-run the buildup every year against your actual payroll register — most subs discover their burden has drifted up three or four points while the billing rate sat still.

How SubMark handles it

Your GC uses Procore. You use a spreadsheet. There’s a better way. The reason T&M pricing goes wrong is almost never that nobody knows the right rate — it is that the rate lives in a workbook in the office and the ticket gets written in a truck.

SubMark closes that gap:

• Rate lists — load your classifications and rates once, and every T&M tag prices off them. Same numbers in the field as in the contract.
• T&M Tags — your superintendent or PM builds the ticket at the work (or a foreman, once you grant that role the permission), the pricing comes off the rate list, and the GC e-signs it on the spot. Several tags convert into one change order.
• Change Order Tracking — build the COR, send the GC a link to review it, and take their redlines and decision in place. Status, aging and recovery tracked against contract value.
• Daily Logs — labor, materials, narrative, weather and photos, submitted and reviewed. The record that backs up every classification and hour on a ticket.
• Time Clock and labor reports — field hours by worker and job, so the office has its own record of who was on site and for how long.
• Job Costing — budget against actuals per job, grouped by labor, material and subs, so an overrun shows up while the job is still running.

The T&M ticket page shows how a priced ticket is actually built — labor, material and other rows, with markup and tax on the ticket as a whole — and job costing is where the cost side of the same rate buildup is reported.

Trade-specific versions of all of it: electrical, plumbing and HVAC and mechanical.

Field users and the subs you invite are free and unlimited, so every foreman can log the daily record that backs up a ticket. See how pricing works.

The short version

• Negotiate the rate schedule into the subcontract at execution. Everything else follows from it.
• Build the labor rate from the wage up: taxes, comp, GL, fringes, small tools, then the contract’s overhead and profit.
• Bill the classification you actually sent.
• Material at invoice cost plus one markup, with the invoice available.
• Equipment at ownership cost for owned, invoice plus markup for rented, and a standby rate agreed in advance.
• No markup on markup, and no consumables billed twice.
• Show the buildup on the ticket. A number that explains itself is a number that gets paid.