Field guide

Remodeler Change Order Pages: The Sentence That Costs $2,800

The sentence that costs $2,800

You quoted a bathroom remodel for $8,400. The client wanted to move a wall, add an extra outlet, and change the tile, and you said yes to all three in the hallway. At the end of the job you are $2,800 short, and that gap is a change order problem. Or more precisely, a no-change-order problem. Most small contractors and service pros lose $5,000 to $20,000 per year to undocumented extras, not because clients are dishonest, but because neither party made the changes official. A change order is a written agreement that modifies the original contract, adjusting scope, price, or schedule, and both the contractor and the client sign it before the changed work begins. On a $40,000 remodel, enough small unbilled changes can wipe out the whole margin.

The threshold most experienced contractors use is simple: anything that takes more than 15 minutes of labor or adds more than $50 in materials gets a change order. Below that, absorb it as goodwill. Above it, document it. The rule is simple because it has to be usable on a job site, in a hallway, with a client standing in front of you. Stop before you say yes to any mid-job request. Write the change down with exact scope, materials, and dimensions. Price it fast. Get a signature before work starts, then file it and repeat.

The four parts of a real price

A properly priced change order has four components: added direct cost, time impact, overhead allocation, and profit. Direct cost is labor, materials, and equipment specific to the change. Labor means hours times a fully loaded rate, using a burden multiplier of typically 1.4 to 1.7 times the base wage, not the raw wage. Materials means actual cost with current pricing, not the bid pricing if prices have changed. Then apply the same markup as the original contract, never a discount. For residential work, 20 to 30 percent on direct costs is common; commercial contracts often set the markup at 10 to 20 percent. Cutting the markup on change orders, which clients often push for, quietly erodes the margin the whole project was built around. Then add a small admin fee, a flat $50 to $250 or 5 to 10 percent, for the time to stop, re-plan, and re-order.

The worked example from the pricing guides makes the arithmetic concrete: $480 labor plus $300 materials is $780 direct cost; add $200 extended overhead for one day of delay, $147 indirect overhead at 15 percent, and $169 profit at 15 percent, for a $1,296 change order. Three pricing structures cover most cases: lump sum for a clear scope like a fixture swap, time and materials when you genuinely cannot see the bottom of it, and unit pricing for repetitive additions. The structure matters less than the signature. Unsigned change orders are a common source of contractor non-payment disputes, and a verbal go ahead often becomes a dispute when the invoice arrives.

The disruption days nobody bills

What is almost always missing from the math is the cost of disruption days. These are days that carry no labor cost of their own, but still hit the job because of the disruption a change causes. Labor days pick up overhead automatically through markup. Disruption days do not, so you have to add it yourself. Start by working out what a single day of a single job costs you in overhead: take your annual overhead, divide by your working days, then divide by the number of jobs you run at once. A $2,000 change can also add three days, and if the change order does not say so, the client holds you to the old finish date. State the days added and the new running contract total. Lead with why it is happening, then the number: they asked for it, or you found rot behind the wall, so the cost reads as a consequence of reality, not a builder's choice.

Frequently asked questions

What is a change order in remodeling?

A written amendment to the original contract that adjusts scope, price, or schedule. Both the contractor and the client sign it before the changed work begins.

When should I issue a change order?

Any time a client requests something not explicitly in the original scope. The working threshold: more than 15 minutes of labor or more than $50 in materials.

How do you price a change order?

Direct costs plus the same markup as the original contract, plus overhead for any added days and a small admin fee. Never discount the markup as a goodwill gesture.

What are disruption days on a change order?

Days with no labor cost of their own that still hit the job because a change disrupted the schedule. They need overhead added explicitly, or the margin absorbs them.