FREE TOOL · BID MARKUP CALCULATOR
PAY-WHEN-PAID
BID MARKUP CALCULATOR.
Enter your project cost and working capital rate. Get the exact dollar amount to add to your bid for every payment term from Net 30 to Net 90. Most subcontractors under-bid this by 1–2% and absorb it from margin on every job.
Total cost to complete — labor, material, equipment, subs
$
Line of credit rate or cost of capital
%
$500,000
PROJECT COST
your input
$123
DAILY CARRY COST
at your LOC rate
$45,000
ANNUAL CARRY IF UNPAID
worst-case reference
BID ADDER BY PAYMENT TERMS
Dollar amount to add to your bid · updates as you type
| PAYMENT TERMS | DAYS TO PAYMENT | CARRY COST ($) | % OF COST | WHAT TO DO |
|---|
WHAT THIS MEANS FOR YOUR BID
Enter your project cost above to see the analysis.
HOW IT WORKS
THE FORMULA BEHIND THE CALCULATOR.
Pay-when-paid means you deploy labor, material, and equipment before the first dollar arrives. That working capital has a cost — either the interest on your line of credit or the opportunity cost of capital tied up in the job. Most subcontractors treat this as a cost of doing business and absorb it from margin. The ones who price it in keep more of what they earn.
THE CALCULATION
CARRY COST = PROJECT COST × (LOC RATE ÷ 365) × DAYS TO PAYMENT
Example: $500,000 cost × (9% ÷ 365) × 75 days = $9,247 carry cost
As a percent of cost: $9,247 ÷ $500,000 = 1.85% — add this to your bid before applying margin.
As a percent of cost: $9,247 ÷ $500,000 = 1.85% — add this to your bid before applying margin.
This is a floor, not a ceiling: The formula calculates break-even on the financing cost only. Your profit markup goes on top. Never compress profit to offset pay-when-paid carry cost.
Price it as a named line item: Include the carry cost as a separate line in your bid buildout. When a GC asks you to sharpen your number, you know exactly which line is negotiable and which is cost recovery.
Slow-pay GCs deserve a premium: If a specific GC consistently pays at 90–120 days, factor in the longer carry cycle — not the contract terms. The contract says Net 30. The GC pays at Net 90. Price for reality.
The annual cost perspective: A subcontractor carrying $500K in average outstanding AR at 9% LOC rate is paying $45,000 per year in financing cost. If that cost is not in the bids, it comes from net profit. On a 10% net margin business, that is the equivalent of $450,000 in revenue that produced no return.
COMMON QUESTIONS
FREQUENTLY ASKED.
Pay-when-paid is a contract clause stating that the subcontractor gets paid only after the GC gets paid by the owner. It transfers payment timing risk from the GC to the sub. On a typical commercial project, this means the sub may wait 45–90 days after completing work before receiving payment. That delay has a real financing cost that most subcontractors never include in their bids.
Pay-when-paid as a timing clause is legal in most states. Pay-if-paid — where the GC owes nothing if the owner never pays — is more restricted and some states void it outright. Either way, the cash flow cost of the delay is the same and needs to be priced into the bid. Whether or not the clause is ultimately enforceable, the carrying cost is real from day one.
Use the calculator above. The formula is: Project Cost × (LOC Rate ÷ 365) × Days to Payment. On a $500K project at 9% LOC rate with a 75-day payment cycle, the carry cost is approximately $9,247 — 1.85% of project cost. Add this as a line item before applying your profit markup. If the GC historically pays slower than the contract terms, use the actual payment days, not the contract days.
At a 9% working capital rate, carrying $200K in unpaid billings for 90 days costs roughly $4,400 in financing per quarter — per job. Across 10 active jobs that is $44K per year coming straight off the bottom line if it was not priced in. For a contractor running 10% net margin on $5M revenue, that $44K represents nearly 9% of annual net profit — from a single line item that most estimators never include.
Margin covers overhead and profit. Financing cost is a separate line item — the cost of having money tied up in a job before payment arrives. Keeping them separate means you can adjust each independently and know exactly which one is being compressed when a job runs tight. Never use margin to absorb financing cost — price financing cost explicitly so your margin targets stay intact.
If the GC consistently pays at 90–120 days and your working capital rate is around 9%, adding 2–4% to your bid just to cover financing is reasonable and defensible. On top of that, price in additional risk premium for GCs you have not worked with before or who have a history of disputed billings. Use the calculator with the actual expected payment days — not the contract terms — for a realistic number.
