Cost Plus Invoice Template

What This Template Includes

• Contract reference and pricing basis (cost plus percentage, or cost plus fixed fee)
• Billing period
• Cost categories: labor, materials, subcontractors, equipment, other direct costs
• Supplier invoice, receipt or timesheet reference for each cost
• Labor hours and agreed cost rate by person or trade
• Markup percentage, or fixed fee and the part billed this period
• Guaranteed maximum price or not-to-exceed amount
• Cumulative cost and fee billed to date, and amount remaining under the cap
• Retainage or fee reserve withheld, if the contract has one
• Costs excluded or not reimbursable under the contract

How to Create Your Cost Plus Invoice

Recommended Payment Terms

Cost-plus work is normally billed in arrears at a regular interval (every two weeks or monthly) so that the client is not financing large amounts of your spending, with payment due on the terms in the contract, often 14 to 30 days. The contract should also say which costs are reimbursable, what labor cost rates include, whether supplier discounts and rebates are passed on, how the fee is calculated and billed (with each invoice, or in instalments of a fixed fee), whether any retainage is held, and what happens if costs approach the cap. Ask for written approval before you pass a guaranteed maximum price or not-to-exceed figure; costs above an agreed cap are usually yours to absorb. For US federal cost-reimbursement contracts, the Allowable Cost and Payment clause (FAR 52.216-7) lets the contractor invoice no more often than once every two weeks, except for small businesses, in the form the contracting officer's representative requires.

Need help writing payment terms? Read our guide to invoice payment terms for best practices and templates.

Tax Information

Recharged costs usually take the tax treatment of your own supply, not of the original supplier's invoice. In the UK, HMRC's VAT Notice 700 (section 25) lets a VAT-registered business leave a payment out of its own VAT calculation as a disbursement only when it paid as the client's agent and every listed condition is met; costs you buy in your own name and recharge, with or without markup, are part of your supply and carry VAT at your rate. In the US, sales tax on materials and on construction or service work depends on the state, and in many cases a contractor pays tax when buying materials rather than charging it to the customer; check your state's rules for your trade before adding a tax line. InvoiceQuickly applies one tax percentage to the whole invoice, has no markup field and copies your saved tax ID to new invoice PDFs: enter the fee as its own line, and issue separate invoices if only some lines are taxable. This is not tax advice; check with your tax authority or an adviser.

Industry context (2026)

The US Federal Acquisition Regulation sets out the government version of this pricing. FAR 16.306 defines a cost-plus-fixed-fee contract as a cost-reimbursement contract that pays the contractor a negotiated fee fixed at the start, which does not vary with actual cost but can be adjusted for changes in the work. FAR 15.404-4(c)(4)(i) caps that fee by statute at 15% of estimated cost for experimental, developmental or research work and 10% for other cost-plus-fixed-fee contracts, with a separate 6% limit for certain architect-engineer services. FAR 16.301-3 allows cost-reimbursement contracts only when the contractor's accounting system is adequate for determining the costs of the contract, and bars them for commercial products and services. The Fixed Fee clause (FAR 52.216-8) lets the contracting officer withhold a reserve of up to 15% of the fee or $100,000, whichever is less. (All FAC 2026-01, effective 13 March 2026, accessed on acquisition.gov in October 2026.) Private cost-plus contracts are not bound by those caps, but clients and lenders often expect the same discipline: a defined list of reimbursable costs, an agreed fee and records good enough to audit.

Worked example

Common mistakes to avoid

Invoicing Tips

• 1Attach or list the evidence for every cost: supplier invoice numbers, subcontractor bills, timesheets. A cost line without a reference is the first one a client disputes.
• 2Show the fee as its own line with the calculation, for example 'Fee 12% of $18,523.65', not spread across the cost lines. Hidden markup destroys the trust that cost-plus pricing depends on.
• 3Agree labor cost rates before work starts and say what they include (wages, payroll taxes, insurance, benefits). Billing a burdened rate when the client expected bare wages causes most cost-plus disputes.
• 4Pass on supplier discounts and rebates if the contract says costs are billed at actual cost. Keep the discounted invoice as the reference.
• 5Print a running total on every invoice: cost and fee billed to date and the amount left under the guaranteed maximum price, so the client sees problems early.
• 6List excluded costs (your own office overhead, rework of defective work, fines) so both sides agree which costs the fee is meant to cover.

Related Resources

• All invoice and business document templates
• InvoiceQuickly for contractors: progress invoices, retainage and change orders
• How to calculate profit margin for a service business
• Profit margin calculator: margin and markup from cost and price
• Preventing scope creep: change orders when the work grows
• Construction invoicing guide

Frequently Asked Questions