In Lesson 1, you found your standing invoice. Then you found what each job must carry of it.
Now the uncomfortable part. Take the last bid you wrote. Did it carry that number?
For most contractors, the honest answer is no. The bid covered materials, labor, subs, and a feeling about what the job was worth. Somewhere in that feeling, the truck got half-paid. The shop got half-paid. The insurance got half-paid. The other half came out of the profit. Every job. Every month. For years.
01
The four parts of a defensible bid
A defensible bid is built from four parts:
- Direct costs. Materials, labor, subs. The costs that exist because this job exists.
- The standing invoice share. Your Lesson 1 total, divided across the jobs you run, multiplied by how long the job runs. This is the part the feeling forgets.
- Target margin. What you intend to earn, decided before the bid, not discovered after.
- The price. The number that makes all three true.
02
The Bid Machine
Move the sliders. Nothing here touches your saved numbers.
- Invoice share this job carries
- $2,500
- The floor: direct costs plus share
- $34,500
- The defensible price
- $40,588
- What cost-plus leaves on the table
- $3,788
Move a slider and watch what happens to the money.
03
Markup is not margin
Say you apply a 15% markup to $100 of cost and call it a 15% margin. Your price is $115, your profit is $15, and $15 of $115 is 13%. You didn't earn 15%. You earned 13%, and you wrote the bid believing you earned more.
Markup is added to cost. Margin is a share of price. To earn a 15% margin, you don't apply 15% to cost. You divide by 0.85. The contractor who runs a year at "15%" markup and believes it's margin has a stack of bids that were quietly 2 points thin. On a million dollars of work, that's $20,000.
04
What a defensible bid sounds like
When the customer asks why you're higher, you have a sentence. "My price carries the full cost of running my company on this job, plus the margin I intend to earn. The lower bid isn't cheaper. It's asking the contractor to absorb part of his own business." You don't have to say it out loud. But you can, because it's true and you can prove it.
MIKE'S EXAMPLE
Mike · General contractor, 43
Mike prices a bathroom addition. Direct costs: $32,000. Duration: two months.
- Standing invoice: $9,600 per month
- Jobs running at once: 4
- Invoice share per job per month: $2,400
- Share this job carries: 2 months x $2,400 = $4,800
- The floor: $32,000 + $4,800 = $36,800
- Target margin: 15%
- The defensible price: $36,800 / 0.85 = $43,294, and Mike wrote $43,300
His old method would have marked up the $32,000 by 25% and bid $40,000. Same house, same tile, same crew. Now run the honest math on that bid: $40,000 minus the true floor of $36,800 is $3,200, an 8% margin, against the 15% he believed a 25% markup would buy him. The invoice share didn't vanish. It ate his margin and called itself competitive.
05
Two Bids, One Job
Take a small job you actually bid in the last year. Write two prices for it. First: direct costs plus whatever markup you actually used that day. Second: direct costs plus the invoice share plus your target margin. Then answer: which bid would you have defended out loud, and why did the first one feel normal?
06
Check Yourself
Answered 0 of 3
07
Enter Your Number
Your defensible bid on a real upcoming job. Five fields: direct costs, invoice share, floor, target margin, price. Lesson 3 checks bids against what actually happened.
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08
Put This Lesson to Work
Verify your invoice share before you trust the bid. Overhead Builder Pro produces the monthly and per-job numbers this lesson prices from.
09
Next
Lesson 3: the bid is a promise. What the job actually paid you is a different number, and the difference between them is where contractors learn.