Time and Materials, Lump Sum or Unit Rate: How to Write the Price Section of a Proposal

Two contractors can quote the same job at the same number and still end up in very different places: one gets paid without an argument, the other spends a month explaining an invoice. The difference is usually the price section. How you price a job (one fixed figure, a breakdown, an hourly rate, or a rate per square foot) decides what the client thinks they agreed to, and that is what you will be held to when the job runs long.

This guide covers the four common ways to price a contractor job, when each one fits, and how to write the price section for each, with a filled-in example from one fictional contractor, Calder Home Repair & Remodeling in Columbus, Ohio. All the numbers are examples, not recommended rates. If you are still working out the number itself, start with how to price a remodeling job; this post is about how to put that number on paper.

The four ways to price a job, and when each fits

Materials + labor fits a job with a fixed scope you can measure and cost before you start: a bathroom remodel from drawings, a furnace swap, a roof tear-off. You show the client the two main parts and the total.

Lump sum is the same fixed scope with one all-in price and no breakdown. It suits jobs where a split would only invite line-by-line haggling, or where you simply sell on the finished result.

Time and materialsfits work where nobody can honestly know the scope until it is underway: leak repairs, troubleshooting, service calls, older-house surprises, anything that starts with "we'll open the wall and see." The client pays for the hours worked and the materials used. It is fair to both sides only when it has a ceiling, which is what a not-to-exceed amount is for.

Unit rate fits repetitive, measurable work: flooring per square foot, fence per linear foot, drywall per sheet, a price per fixture or per outlet. The client pays for the quantity actually installed. Small jobs need a minimum charge, because you still load the truck and drive out for 40 square feet.

A fixed price puts the risk of the unknown on you. Time and materials and unit rates move part of it to the client, which is why those two formats need more explaining on paper, not less.

1. Materials + labor

The client needs to see what the money buys: a materials figure, a labor figure and a total, with the scope above it detailed enough that both of you could point at a line and say "that is included." What protects you is an exclusions list and a change-order clause, so anything outside the written scope is priced separately rather than absorbed. Example: a full bathroom remodel for Dana Whitfield at 418 Linwood Ave.

2. Lump sum

One line, one number. Because there is no breakdown, the scope carries all the weight: what is included, which materials and grades, what is excluded, and how changes are priced. A lump sum with a thin scope is the easiest price in the world to argue about. Example: tearing out and rebuilding a pressure-treated deck for Ken and Adaeze Okafor.

For how to pick between these two and set the number, see how to bid a construction job.

3. Time and materials

A time and materials price section has to answer five questions, or the client will answer them for you when the invoice arrives:

The hourly rate, and who it applies to. Per person on site or per crew hour is a big difference on a two-person job. Say which. How materials are billed: at cost, or at cost plus a markup you state as a percentage. An unstated markup looks like a hidden one. An estimate of hours and materials, clearly labelled as an estimate, so the client can budget. A not-to-exceed cap,and what happens as you approach it: you stop and get the client's written approval before going past it, rather than finishing and sending the overage. How time is recorded and billed: a daily log of who worked, how many hours, and on what, plus receipts for materials, shared at whatever interval you bill.

Example: Marcus Bell at 1607 Hollister Rd has water staining on a kitchen wall below an upstairs bathroom. The leak source is unknown until the drywall comes off. Calder prices it at $95 an hour per person, materials at cost plus 15%, an estimate of 60 hours and $1,800 of materials, and a $9,000 cap.

Notice the word "Estimated" on every figure that is not a rate, and the sentence that says how the final amount is set. That is what keeps a client from reading $7,500 as a promise. The cap is the part that gets you hired: it tells the client the worst case before they sign.

If you cannot give an estimate at all, a rates-only section is honest too: the rate, the materials basis, and the sentence about the final amount, with no total. Just do not invent one to look tidy.

4. Unit rate

A unit rate price section needs: the unit, spelled out (square foot of finished floor, linear foot of fence line, per fixture); the rate per unit; an estimated quantity, labelled as an estimate; how the final quantity is measured, for example measured on site after installation, with or without closets, waste or gates counted; and a minimum charge so a tiny final quantity still covers the trip and setup.

Example: luxury vinyl plank across the main floor for Priya Raman at 55 Kenwick Dr. Calder quotes $7 per square foot installed, an estimated 1,180 square feet, and a $1,500 minimum charge.

The measurement rule belongs in the scope or terms, in words: "Final quantity is measured on the installed floor and excludes areas under fixed cabinets." Without it, "1,180 square feet" becomes a negotiation at the end of the job.

The mistakes that start disputes

An estimate the client read as a quote.If the number is not labelled "estimated" and there is no sentence saying how the final amount is set, assume the client will treat it as fixed. No cap on time and materials. An open-ended hourly job is the one clients fear most, and the one they are most likely to dispute. An undefined markup."Materials billed as used" with a markup added later reads as a surprise charge. A unit nobody defined. Square feet of what, measured how, before or after waste? No minimum charge on unit work, so a job that shrinks on site stops covering your costs.

One more: these terms have legal weight, and the rules differ by state and province. Some places have specific requirements for home-improvement contracts, written estimates, deposits or cost-based pricing. Check your state or provincial rules (your licensing board or consumer protection office is the usual starting point) before you adopt a format, especially for residential work.

For the basics every quote needs regardless of how it is priced, see how to make a quote for a job. If you want to offer the client choices rather than one price, the good, better, best proposal shows how to lay out three options. And if you need to send a proposal before you have a price at all, a proposal can go out with the price to be confirmed after the site visit, covered in sending a quote before the site visit.

Doing it in ProposalPro

Since November 2026, a contractor proposal in ProposalPro can be priced all four ways. The form shows four choices: Materials + labour, Lump sum, Time and materials and Unit rate. For time and materials you enter an hourly rate (and whether it is per person or per crew) and an optional materials markup; for unit rate, a rate and what it is per. Under "Give the client a ballpark (optional)" you can add estimated hours, estimated materials and a not-to-exceed amount, or an estimated quantity and a minimum charge. In the guided interview you can just say it ("ninety-five an hour plus materials") and the price card shows what was heard before any number counts.

The money lines in the examples above are exactly what the app writes. The arithmetic is done in code, not by the AI, every estimate is labelled as an estimate (the PDF total reads ESTIMATED TOTAL), and a not-to-exceed amount below the estimate is flagged before you generate. With no estimate given, the proposal shows the rates only and never makes up a total. For the rest of the document around the price, see the contractor quote template, or the quote generator for a shorter one-page quote.

The honest limits: it is for contractor proposals only (consultant hourly fees are not covered); one rate line per proposal, so a job priced as sod per square foot plus trees each does not fit; days are not converted to hours; and once a proposal is generated the money section is plain text, so if you edit the rate by hand the estimate is not recalculated for you. Put your measurement rule and your "we stop and ask before passing the cap" terms in the Special Notes field, in words, so they land in the proposal.

Try it on your next odd job

Pick the job you have been putting off quoting because you do not know what is behind the wall, and price it as time and materials with a cap. You can start free and generate the proposal in a few minutes, then read the price section the way your client will.