General Contractor Estimates: Subs, Materials, and Markup
A general contractor in Boise sent us a bid he had just lost. Eleven trades, four sub quotes pasted in at cost, one number at the bottom, and a note from the homeowner asking why his price was $4,800 higher than the other guy's. He could not answer the question, because his own estimate could not tell him where the $4,800 lived. That is the real problem with most general contractor estimates: they are assembled, not built.
A general contractor estimate is three estimates stacked on each other
The work a GC prices splits into three categories that behave nothing alike, and an estimate that blends them cannot be defended line by line when a client pushes back. There is work your own crew self-performs, where you control the labor hours and the material buy. There is work you subcontract, where another company owns the risk and hands you a number. And there is the work of running the job itself: scheduling eleven trades into the right order, chasing the inspector, standing in the gap when the tile shows up wrong. Builders subcontract roughly 84 percent of construction costs and use about two dozen different subs on a single-family home, according to a NAHB study. If most of your cost is other people's work, most of your estimate is a coordination document.
The GC who lost that Boise bid had priced all three the same way. Sub quotes went in at cost. His own carpentry went in at a rate he had not recalculated since 2023. The coordination went in nowhere at all.
Sub quotes are inputs to your estimate, not lines in it
The fastest way to lose money as a GC is to treat a subcontractor's number as a finished line item and pass it straight through to the client. A sub quote is priced for the sub's scope, on the sub's assumptions, with the sub's exclusions buried at the bottom. The electrician who quoted $9,200 quoted it assuming the panel stays where it is, the drywall is open when he arrives, and someone else is hauling the debris. Every one of those assumptions is a schedule obligation that lands on you. When you paste his number into your bid untouched, you have quietly agreed to all three without pricing any of them. Read the exclusions before the total. The exclusions are where the sub tells you exactly which parts of his job he expects you to do.
This is also why a sub quote that comes in low is not automatically good news. A number well under the others usually means the sub read a smaller scope than you did, and the gap surfaces mid-job as a change order you have to justify to a client who thought the price was settled.
What belongs on a general contractor estimate template
A general contractor estimate template has to separate cost from scope from responsibility, which most downloadable templates do not. At minimum it carries: the scope by phase rather than by trade, self-performed labor with hours and burdened rate shown separately from materials, subcontracted work listed by trade with the sub's scope summarized, an allowances section for client selections that are not final, exclusions stated plainly, your markup, and the payment schedule tied to phase completion. The order matters less than the separation. When those categories are distinct, a client asking why your bid is higher gets an answer, and you can find the leak yourself when a job comes in thin. Organize the phases the way the job actually runs, demo through finish, not the way an accounting system files them. We have written more about structuring estimate sections if you want the longer version.
Allowances deserve their own line and their own caution. An allowance is a placeholder, not a price, and the moment a client treats it as a price you have a dispute waiting at the finish stage.
"I stopped calling it markup on the estimate. It's a line that says construction management, with a number next to it. Nobody's argued with it since. They argued with 'markup' every single time."
Marking up sub work is not double-dipping
Here is the position that will annoy a fair number of contractors: you should apply your full markup to subcontracted work, and the GCs who discount it because "the sub already built profit into his number" are subsidizing the client with their own overhead. The sub's profit covers the sub's business. It does not cover your insurance, your truck, your license, the hours you spend sequencing his crew against four others, or the warranty you carry on his work after he is gone. The general contractors we work with who run healthy margins price sub work at the same markup as self-performed work, and the ones running thin are almost always the ones who shaved it because passing through a sub felt like less work than doing it. It is not less work. It is different work, and it is the work only you can do.
The honest limit: this logic changes on cost-plus and open-book contracts, where your fee is disclosed and negotiated up front. There, the conversation is about the fee percentage itself, not about whether markup is hiding inside a line. And a markup percentage is not a margin percentage, which is a distinction that quietly eats a lot of GCs. If those two words feel interchangeable to you, the difference is worth twenty minutes.
The reporting threshold on your subs moved this year
If you pay subcontractors, the number you have had memorized for years is now wrong. The Form 1099-NEC reporting threshold rose from $600 to $2,000 for payments made in 2026, per the IRS instructions for Forms 1099-MISC and 1099-NEC, with inflation adjustments possible starting in 2027. The filing deadline is unchanged at January 31. This does not change what you charge, but it changes what you track, and it is the kind of detail that separates a GC running a business from one running a truck. Every dollar you pay a sub is a dollar you need attached to a name, an address, and a W-9 you collected before the first check went out, not in January when you are trying to close the year.
Collect the W-9 with the signed sub agreement, before anyone sets foot on site. Chasing a tax ID from a sub you no longer work with is one of the least pleasant phone calls in this business.
Where the schedule and the money stop being separate documents
On a GC job the payment schedule is not an afterthought stapled to the estimate. It is the estimate, expressed in time. When your phases are real and your draws are tied to phase completion, you are never floating three subs' invoices while waiting on a client payment that has no trigger attached to it. Across the general contractors using Jobkore, the pattern we see repeatedly is that the bids with phase-tied draws get paid faster than the ones with calendar-tied draws, because a draw tied to "rough-in complete and inspected" is a fact the client can verify, while a draw tied to "August 1" is just a date the client can argue with. Build the schedule into the estimate and the money follows the work instead of trailing it.
Retainage belongs in this conversation too. If a client is holding 10 percent, that is your profit sitting in someone else's account until final walkthrough, and it needs to be visible on the estimate rather than discovered at closeout.
One sub quote, read backwards
The next sub quote that hits your inbox this week, read it from the bottom up. Start with the exclusions, then the assumptions, then the scope, and only then look at the number. You will find at least one thing the sub expects you to handle that you had mentally assigned to him. That gap is not a paperwork problem, it is either a line on your estimate or money out of your pocket in about six weeks. Do it with one quote. The habit sticks faster than any template you download.
The Boise GC rebid a similar job that spring with the same subs and the same crew, and the number came out almost identical to the one he lost with. The difference was that this time he could walk the homeowner through where every dollar sat, and the homeowner signed it. Same price. A bid that explains itself is a different product than a bid that just ends in a total.
Frequently Asked Questions
What should be included in a general contractor estimate?
A general contractor estimate should carry scope by phase, self-performed labor and materials shown separately, subcontracted work listed by trade with each sub scope summarized, allowances for unfinalized client selections, stated exclusions, markup, and a payment schedule tied to phase completion. The separation is what lets you defend the bid line by line.
How much do general contractors mark up subcontractor work?
General contractors running healthy margins apply the same markup to subcontracted work as to self-performed work. The subcontractor profit covers the subcontractor business, not your insurance, license, scheduling hours, or the warranty you carry after the sub leaves the site. Discounting markup on subs quietly subsidizes the client with your own overhead.
What percentage of a construction job is subcontracted?
Builders subcontract roughly 84 percent of construction costs and use about two dozen different subcontractors on a typical single-family home, according to a NAHB study. When most of your cost is other companies work, your estimate functions primarily as a coordination document rather than a labor and material list.
Do I need to file a 1099 for subcontractors in 2026?
Yes, if payments reach the threshold. The Form 1099-NEC reporting threshold rose from $600 to $2,000 for payments made in 2026, per the IRS, with inflation adjustments possible starting in 2027. The filing deadline stays January 31. Collect the W-9 with the signed sub agreement rather than chasing it at year end.
What is the difference between an allowance and a price on an estimate?
An allowance is a placeholder for a client selection that is not final, such as tile or fixtures. A price is a committed number. Clients routinely read allowances as prices, which is why allowances need their own line and plain language stating that the final cost adjusts once the selection is made.
