| Category | Allowance | |||
|---|---|---|---|---|
| Total Allowances (8 items) | $28,800 | |||
Standard Allowance Terms
- Definition. An allowance is a budgeted amount included in the contract price for items that have not yet been selected by the owner. The allowance covers material cost only unless stated otherwise.
- Selections. The owner shall make all allowance selections by the deadline listed above. If selections are not made by the deadline, the contractor may select materials at their discretion to maintain the project schedule.
- Overages. If the owner selects materials exceeding the allowance amount, the difference (overage) will be documented as a change order and added to the contract price before ordering.
- Credits. If the owner selects materials below the allowance amount, the difference (credit) will be returned to the owner and deducted from the contract price.
- Labor. Unless specifically noted, allowance amounts cover material cost only. Installation labor is included in the base contract price and is not affected by allowance selections.
- Tax and delivery. Sales tax and standard delivery fees are included in the allowance unless otherwise noted.
Typical Allowance Ranges (2026)
Reference ranges for setting realistic allowance amounts in remodel contracts.
| Category | Budget Range | Mid-Range |
|---|---|---|
| Cabinets (per LF) | $100-$200 | $200-$500 |
| Countertops (per SF) | $10-$25 | $50-$100 |
| Flooring (per SF) | $2-$5 | $5-$12 |
| Light Fixtures (each) | $50-$150 | $150-$400 |
| Plumbing Fixtures (each) | $100-$250 | $250-$600 |
| Appliances (set) | $2,000-$4,000 | $4,000-$8,000 |
| Tile (per SF) | $1-$5 | $5-$12 |
| Hardware (per piece) | $3-$8 | $8-$20 |
12,800+ estimates calculated this month
Last updated: 2026-02-21
Quick Answer
A construction allowance schedule lists every item in a remodel contract where the homeowner has not yet picked their materials, along with the budgeted dollar amount for each. If the final selection costs more, the homeowner pays the overage via change order. If it costs less, they get a credit. Allowances keep contracts moving forward while the client shops for cabinets, countertops, and fixtures.
What to include in your schedule
- Category name (Cabinets, Countertops, Flooring, etc.)
- Description of what the allowance covers
- Dollar amount based on mid-range pricing for the project scope
- Selection deadline (typically 30 days before installation)
- Terms explaining overage and credit handling
- Whether tax and delivery are included or separate
Typical allowance categories for kitchen remodels
| Category | Unit | Budget | Mid-Range | High-End |
|---|---|---|---|---|
| Plumbing fixtures | each | $100-$250 | $250-$600 | $600-$2,000+ |
| Light fixtures | each | $50-$150 | $150-$400 | $400-$1,500+ |
| Flooring | per SF | $2-$5 | $5-$12 | $12-$25 |
| Cabinets | per LF | $100-$200 | $200-$500 | $500-$1,500 |
| Countertops | per SF | $10-$25 | $50-$100 | $100-$200 |
| Appliances | set | $2,000-$4,000 | $4,000-$8,000 | $8,000-$20,000+ |
Worked example
Mid-range kitchen remodel, 12 LF cabinets, 40 SF countertops:
- Cabinets: 12 LF x $350/LF = $4,200 allowance
- Countertops: 40 SF x $75/SF = $3,000 allowance
- Flooring (150 SF): 150 x $8/SF = $1,200 allowance
- Appliances: $5,000 allowance (range, dishwasher, microwave)
- Lighting (6 fixtures): 6 x $200 = $1,200 allowance
- Plumbing fixtures: $1,000 allowance (kitchen faucet + disposal)
- Tile backsplash (30 SF): 30 x $10/SF = $300 allowance
- Hardware (30 pieces): 30 x $12 = $360 allowance
- Total allowances: $16,260
If the homeowner selects a quartz countertop at $100/SF instead of the $75/SF allowance, the overage is 40 SF x $25 = $1,000 change order.
Pro tips from the field
- Take clients shopping early. Before you set allowances, walk the homeowner through a showroom so they have realistic expectations. This prevents "I had no idea cabinets cost that much" conversations later.
- Set allowances at mid-range, not entry-level. Low-balling allowances to win the bid will burn you. When every category goes over, the client feels misled and your relationship suffers.
- Put the schedule in the contract as an exhibit. Don't bury allowances in paragraph form. A clean table that both parties sign is much harder to dispute.
- Track overages and credits on a running log. Keep a simple spreadsheet showing allowance vs. actual for every category. Share it with the client at each pay application.
- Document everything before ordering. Get the signed change order for any overage before placing the material order. Verbal "go ahead" agreements lead to payment fights at the end of the job.
Common mistakes to avoid
- Setting unrealistically low allowances to win the bid. The homeowner signs the contract at $50,000, goes over on every allowance, and the final bill is $65,000. That is a recipe for a dispute and a bad review.
- Not defining what the allowance covers. Does the $4,000 countertop allowance include the sink cutout? Edge profile? Removal of the old countertop? Specify it.
- Skipping the selection deadline. Without a firm deadline, homeowners shop indefinitely and your project schedule slips. Thirty days before installation is the standard.
- Confusing allowances with estimates. An allowance is a budgeted set-aside. An estimate is your calculated cost. Do not use "allowance" for work you should be pricing accurately.
Need to build the full estimate around your allowances? Use the contractor estimate template to create a professional bid with all your line items. Or try EstimationPro free to build estimates, send proposals, and follow up automatically so you win more of the bids you already send.
Construction Allowances Guide
What allowances are, when to use them, how to set realistic amounts, and the mistakes that lead to disputes.
What Is a Construction Allowance?
A construction allowance is a budgeted dollar amount included in a remodel or construction contract for items the homeowner has not yet selected. Instead of holding up the contract while the client shops for cabinets, countertops, or light fixtures, the contractor sets a reasonable dollar amount for each category. The homeowner picks their materials later.
- Overage: If the selection costs more than the allowance, the homeowner pays the difference via a change order
- Credit: If the selection costs less than the allowance, the homeowner gets a credit deducted from the contract
- Labor is separate: Allowances typically cover material cost only. Installation labor stays in the base contract
Allowances let you sign the contract and start work while the client takes time to finalize their selections. Without them, projects stall waiting for decisions.
Key Takeaways
- Budgeted amount for items not yet selected by the homeowner
- Overages become change orders; under-budget selections become credits
- Allowances cover material cost only unless stated otherwise
When to Use Allowances vs. Specified Materials
Use allowances when the homeowner needs more time to decide, and specified materials when the selection is already made. Getting this wrong causes disputes.
- Use allowances for: Cabinets, countertops, flooring, light fixtures, plumbing fixtures, tile, hardware, and appliances. These are items homeowners want to touch and see before committing.
- Specify materials for: Framing lumber, drywall, insulation, roofing, electrical wire, plumbing pipe, and concrete. These are builder-grade items the homeowner does not need to select.
- Grey area: Paint colors are usually specified late but don't need an allowance since the material cost difference between colors is negligible. Interior doors and trim profiles can go either way.
A good rule: if the homeowner will see it and touch it every day, make it an allowance. If it is behind the walls, specify it.
Key Takeaways
- Allowances for visible selections (cabinets, countertops, fixtures)
- Specify structural and hidden materials (lumber, drywall, wire)
- If the homeowner touches it daily, make it an allowance
How to Set Realistic Allowance Amounts
Set allowances based on the quality level the client expects, not the cheapest option available. Under-setting allowances creates sticker shock when the homeowner starts shopping. Over-setting them inflates the contract price and can cost you the job.
- Start with the mid-range. For a mid-range kitchen remodel, cabinets at $200-$500 per linear foot, countertops at $50-$100 per square foot, and flooring at $5-$12 per square foot are realistic starting points.
- Match the project scope. A $20,000 bathroom remodel should not have a $5,000 fixture allowance. Scale allowances proportionally to the project budget.
- Include tax and delivery. Tell the client upfront whether tax and delivery are included in the allowance or separate. Standard practice is to include them.
- Shop with the client. Take them to a showroom early so they can see what their allowance actually buys. This prevents surprises later.
The goal is to set an amount the client will land close to. If most of your clients go over by 30-50%, your allowances are set too low.
Key Takeaways
- Set at mid-range for the target quality level, not the cheapest option
- Include tax and delivery in the allowance amount
- If most clients go over by 30%+, your allowances are too low
Common Allowance Mistakes Contractors Make
These mistakes lead to disputes, change orders, and unhappy clients:
- Setting allowances too low to win the bid. This is the biggest one. Some contractors set unrealistically low allowances to make the total contract price look cheaper. The client goes over on every category, and the final bill is thousands more than the signed contract. This destroys trust.
- Not specifying what the allowance covers. Does the $4,000 countertop allowance include the sink cutout? Edge profile? Does it include removal and disposal of the old countertop? Be specific.
- Skipping the selection deadline. Without a deadline, the homeowner shops indefinitely and delays your project. State clearly: "All selections must be made 30 days before scheduled installation."
- Not documenting overages as change orders. Every overage must be signed before ordering. Verbal agreements lead to payment disputes at the end of the job.
- Forgetting to credit under-budget selections. If the client picks a $3,000 faucet set when the allowance was $4,000, they get $1,000 back. Failing to credit this erodes trust fast.
Key Takeaways
- Low-balling allowances to win bids destroys client trust
- Specify exactly what each allowance covers and excludes
- Always set a selection deadline and document overages as change orders
How to Use This Calculator
Fill in project details
Enter the project name, client name, contractor name, and selection deadline at the top. This information prints on the schedule for a professional document.
Edit allowance categories and amounts
Click any row to edit the category, description, and dollar amount. Add or remove items to match your project scope. Default amounts are based on mid-range residential remodel pricing.
Review the total and terms
Check the total allowance amount at the bottom of the table. Review the standard terms section to make sure the overage, credit, and selection deadline language matches your contract.
Print or share the schedule
Click Print to get a clean, professional allowance schedule. Attach it as an exhibit to your contract so the client knows exactly what is included and how overages and credits work.
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Frequently Asked Questions
What is a construction allowance?
A construction allowance is a budgeted dollar amount included in a remodel or construction contract for items the homeowner has not yet selected. Common allowance categories include cabinets, countertops, flooring, lighting fixtures, plumbing fixtures, tile, and appliances. If the final selection costs more than the allowance, the homeowner pays the difference (overage). If it costs less, they receive a credit.
What should be included in an allowance schedule?
A complete allowance schedule includes: category name (cabinets, countertops, etc.), description of what the allowance covers, dollar amount, selection deadline, and terms explaining how overages and credits are handled. It should also specify whether the allowance covers material only or includes tax and delivery.
How do I set realistic allowance amounts?
Base allowance amounts on the quality level your client expects, not the cheapest option. For a mid-range kitchen remodel, typical allowances are: cabinets $200-$500 per linear foot, countertops $50-$100 per square foot, flooring $5-$12 per square foot, and appliances $4,000-$8,000 per set. Take the client to a showroom early so they can see what their allowance actually buys.
What happens if the homeowner goes over the allowance?
When a selection exceeds the allowance, the difference is documented as a change order and added to the contract price. The change order should be signed by both parties before the materials are ordered. Never order over-budget materials on a verbal agreement. This is where most allowance disputes originate.
What is the difference between an allowance and an estimate?
An allowance is a budgeted set-aside for items not yet selected. An estimate is the contractor's best calculation of what specified work will cost. Allowances are adjusted up or down when the homeowner makes their selection. Estimates are fixed unless a change order modifies the scope. A contract can include both: estimated costs for specified work and allowances for unselected items.
Should allowances include labor or just materials?
Standard practice is material only. Installation labor is included in the base contract price and does not change based on which cabinet or tile the homeowner picks. However, some selections do affect labor. For example, intricate tile patterns take more time than simple layouts. If a selection could significantly change labor hours, state that in the allowance notes so the client is not surprised.
How far in advance should selections be made?
Require selections 30 days before the scheduled installation date as a minimum. Custom cabinets need 6-16 weeks of lead time, so those selections should happen during the design phase. Countertops need 2-4 weeks for fabrication. Tile, fixtures, and hardware typically need 1-3 weeks. Build a selection schedule into your project timeline and communicate it to the client at contract signing.
Can I use this allowance schedule for commercial projects?
Yes. The format works for both residential and commercial projects. Commercial contracts may use construction specifications (CSI divisions) instead of simple category names, and may require more detail on unit pricing, quantities, and approved manufacturers. The standard terms (overage as change order, credit for under-budget) apply the same way.
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