20% overhead and profit on top of $65 an hour in Austin. Is it counted twice?

The labor line is already priced at $65 an hour. Then a separate line adds 20% for overhead and profit on everything, labor included. The Texas DOT rule that public data can check against counts overhead and profit inside the labor markup. So the overlap is worth one question.

The card for this issue. The quote is illustrative, written for teaching; it is not any real contractor's quote.

The quote

Illustrative quote. Deck rebuild, Austin, TX.

Line	Quoted
Labor, 2 carpenters x 5 days, 80 h @ $65	$5,200
Lumber, hardware, fastenersNo invoices attached	$4,800
Overhead and profit, 20% of $10,000The line to ask about	$2,000
Total	$12,000

The one line to ask about

Overhead and profit, 20% of $10,000: $2,000

TxDOT's rule for paying contractors for extra work adds 25% to wages "as compensation for overhead, superintendence, profit, and small tools" (Item 9, Article 9.7.1.1), and another 55% of the labor cost for labor insurance and labor taxes (Article 9.7.1.2). Applied to the BLS May 2025 wage for carpenters in the Austin metro, the loaded rate is $46.60 to $60.75 an hour.

The quote's $65 an hour is already above the loaded rate at the 90th percentile wage, and the loaded rate already contains overhead and profit. Adding 20% on top of the labor line puts $1,040 more on the same costs.

Materials are different. The same TxDOT rule pays invoice cost plus 25% for overhead and profit on materials (Article 9.7.1.3), so 20% on materials sits inside that reference. Ask for the invoices.

The arithmetic

1. Loading: 1 + 25% + 55% = 1.80 (TxDOT Item 9)
2. Loaded rate: $25.89 x 1.80 = $46.60 at the mean wage; $33.75 x 1.80 = $60.75 at the 90th percentile
3. Reference for 80 hours: $3,728 to $4,860
4. Quoted labor: $5,200, or $65 an hour
5. Overhead and profit on labor: 20% x $5,200 = $1,040
6. Labor plus its share of overhead and profit: $6,240, or $78 an hour
7. Overhead and profit on materials: 20% x $4,800 = $960, inside the 25% materials markup in TxDOT Article 9.7.1.3

Public numbers used above:

• $25.89: Carpenters (SOC 47-2031), Austin-Round Rock-San Marcos, TX, mean hourly wage, May 2025. Source
• $33.75: Carpenters (SOC 47-2031), Austin-Round Rock-San Marcos, TX, 90th percentile hourly wage, May 2025. Source
• 25%: TxDOT Item 9, Articles 9.7.1.1 (labor) and 9.7.1.3 (materials): overhead and profit. Source
• 55%: TxDOT Item 9, Article 9.7.1.2: labor insurance and labor taxes, on labor cost. Source

What to ask the contractor

Copy this into a text or an email. A contractor with a reason for each number can answer in a minute.

Thanks for the quote. One question on the overhead and profit line:
1. Does the $65 hourly rate already include your overhead and profit, or only wages, insurance and taxes?
2. If it already includes them, could the 20% apply to materials only?
3. Could you attach the material invoices or a supplier quote for the $4,800 line?

Copy the questions

What this does not establish

It does not show the contractor is overcharging. A contractor is free to price labor bare and put all overhead in one line, or the other way around. It shows that this quote may be doing both, and a one-sentence answer settles it. The TxDOT rule is a public-works payment rule, not a law for home projects.

Questions

Is 20% overhead and profit normal?

No public rule sets a normal percentage for home projects. TxDOT's public-works rule uses 25% on wages for overhead, profit and small tools, 55% for insurance and taxes, and 25% on materials. What matters is whether the labor rate already includes it.

How do I know if overhead is counted twice?

Compare the hourly labor rate with a loaded wage. If the rate is already at or above the loaded rate, ask what the separate overhead line covers that the rate does not.

Sources

Every public number on this page links to the record it comes from. Wages were looked up in USCCDB, which carries the BLS file as published. Statutes, codes and agency pages are quoted as published on October 9, 2026; check the source for changes.

1. Texas Department of Transportation, Standard Specifications 2024, Item 9, Measurement and Payment, Articles 9.7.1.1 to 9.7.1.3
2. U.S. Bureau of Labor Statistics, Occupational Employment and Wage Statistics, May 2025, metropolitan area data (oesm25ma.zip)
3. United States Construction Cost Database (USCCDB) v1.0, doi:10.5281/zenodo.22979157, CC BY 4.0

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