How to Price a Change Order (Step-by-Step for Contractors)

Quick Answer

To price a change order, re-scope the work, estimate labor + materials + subs, add direct job costs (dump fees, delivery, rentals), then apply your normal overhead + profit markup (or your change-order markup if your contract allows). Finally, add time impact (extra days/weeks) as a line item or schedule note and get the change approved in writing before you proceed.

If you want the fast version: (1) quantify the delta, (2) price it like a mini-job, (3) document it, (4) collect approval, (5) update schedule and invoicing.

Need a form? Use our Change Order Template: https://estimationpro.ai/tools/change-order-template

What a “change order” really is (and why pricing gets messy)

A change order is a contract modification—not just “a little extra.” It changes at least one of these:

Scope (what you’re building/installing)
Price (what the owner pays)
Schedule (when you finish)
Specifications/materials (what you’re using)

Pricing gets messy because changes usually happen midstream when:

demo is open and surprises appear
crews are already scheduled
materials are already ordered
the homeowner is emotional and wants a quick yes

Your job is to stay calm and make the pricing consistent, explainable, and documentable.

Inputs you need before you price anything

Before you attach a number to a change, get these locked:

What exactly is changing? (written description + photos)
Quantity/measurements (linear ft, sq ft, count, etc.)
Finish level (paint grade vs stain grade, tile size, grout type, etc.)
Who supplies what? (owner-supplied fixtures vs contractor-supplied)
When the decision is needed (to avoid delays)

If any of these are fuzzy, you’ll either underprice or spend hours revising.

The contractor-friendly change order pricing process (7 steps)

1) Write the scope in plain English

Use a short, specific scope statement. Example:

“Add 24 sq ft of 12x24 porcelain tile backsplash, including waterproof membrane at sink area, new schluter trim, and re-grout the existing 6 linear ft behind the range to match.”

If it’s unclear, it’s not a change order—it’s a dispute waiting to happen.

2) Break the change into cost buckets

Price like a mini-estimate. Use buckets you can defend:

Labor (crew hours × loaded rate)
Materials (tile, thinset, trim, fasteners)
Subcontractors (plumber/electrician/stone)
Equipment/rentals (tile saw rental, dumpster, lift)
Permits/inspection fees (if applicable)
Delivery/short-load fees (common on concrete/material orders)

3) Estimate labor in hours (not vibes)

Most change order mistakes happen in labor.

A simple method:

list tasks
assign hours per task
add setup/cleanup
add an “integration tax” (because you’re working around finished work)

Integration tax is real: protecting floors, masking, moving furniture, keeping a home livable, and working around other trades slows production.

If you need a loaded labor rate, use: https://estimationpro.ai/tools/labor-cost-calculator

4) Price materials with waste + restocking reality

Materials on change orders usually cost more because:

you’re buying small quantities
you can’t always return opened boxes
matching existing finishes can require premium items

Add a waste factor when appropriate:

tile: 10–15% typical (more for diagonal/pattern)
paint: include touch-up extra
flooring: 5–10% typical depending on product

5) Add overhead + profit (markup vs margin)

Once you have your direct cost, apply overhead + profit.

If your contract sets a change-order markup (common), use that. If not, use the same pricing discipline as your original bid.

Markup vs margin confusion causes bad decisions—use this refresher: https://estimationpro.ai/blog/contractor-markup-vs-margin

6) Include schedule impact (time is money)

A change that adds 2 days can cost you more than the visible line items because:

crews may need to remobilize
inspections may shift
other jobs may get delayed

You can handle schedule impact 2 ways:

Schedule note only: “Adds 3 working days to substantial completion.”
Line item: “Extended general conditions: 3 days × $___/day.”

If your overhead is $150–$400/day (or more) depending on job size, this is not a “fee”—it’s real cost.

7) Present it cleanly and get written approval before work starts

A good change order has:

what’s added/removed
price add/deduct
schedule impact
signature + date

Use our template: https://estimationpro.ai/tools/change-order-template

Change order pricing table (simple model you can copy)

Use this structure to stay consistent:

Bucket	What to include	Notes
Labor	tasks, hours, crew size, loaded rate	include setup/cleanup + protection
Materials	product + freight + waste	small orders cost more
Subs	quotes or allowances	include mobilization
Rentals/fees	dump fees, delivery, permits	don’t forget disposal
General conditions	supervision, temp protection, extra trips	use daily rate when appropriate
Overhead + Profit	your markup/margin	match contract or standard

Worked Example #1: “Add recessed lights after drywall is up”

Scenario: homeowner wants 6 additional recessed lights after drywall is installed.

Scope:

cut and install 6 recessed cans
run wiring to existing circuit (assume accessible attic)
patch/texture/prime and paint touch-up in 6 locations

Direct costs (example numbers):

electrician labor: 6 lights × 0.75 hr = 4.5 hrs
electrician materials: cans + wire + connectors = $180
drywall patch labor/materials: $240
paint touch-up: $60

Direct cost subtotal: $ (4.5 hrs × $95/hr) + 180 + 240 + 60 = $907.50

Add overhead + profit (example 35% markup):

$907.50 × 1.35 = $1,225 (rounded)

Schedule impact:

add 1 day (coordination + dry time) noted on change order

Change order price (example): $1,225

Key takeaway: the “lights are cheap” mindset ignores patch/paint + coordination.

Worked Example #2: “Upgrade from laminate to quartz countertops”

Scenario: original contract included laminate counters. Owner wants quartz.

Delta pricing approach:

price the new scope (quartz)
subtract the credit for the original allowance (laminate)

Example:

quartz supply & install (quote): $4,800
plumbing disconnect/reconnect: $450
disposal/haul-off: $150

New scope subtotal: $5,400

Credit for original laminate allowance: -$1,200

Delta direct cost: $4,200

Apply markup (example 25%):

$4,200 × 1.25 = $5,250

Schedule impact:

add 7–14 days depending on fabrication lead time

Change order price (example): $5,250

Key takeaway: change orders aren’t always “add-on profit”—sometimes you’re managing lead times and protecting the schedule.

Common mistakes that create change order drama

Starting work before approval (“we’ll settle up later”)
No photos of the existing condition
No schedule language (client thinks it won’t delay anything)
Underpricing labor (integration tax ignored)
Not pricing risk (unknown framing/hidden conditions)
No credit line when swapping materials (owner feels double-charged)

Pro tips to keep change orders profitable and fair

Use a consistent change order markup clause in your contract.
Keep a minimum change fee for small work (e.g., $150–$350) to cover admin/remobilization.
Quote changes in ranges when unknowns exist (or use an allowance) and clarify what triggers a re-price.
Always include a “not to exceed” when the owner wants speed more than precision.

FAQ

What markup should I use on change orders?

If your contract specifies it, follow that. If not, use the same pricing discipline you use for normal work. Many contractors use 20–35% markup depending on the type of work and risk, but the right number depends on overhead, crew efficiency, and schedule impact.

Should change orders include overhead?

Yes. Overhead exists whether the client changes something or not. If a change extends the job or increases admin/coordination, overhead impact is real.

Do I need a change order for “small” changes?

If it changes price, scope, or schedule, yes. Even $150 changes create confusion later without documentation.

How do I price a change when I can’t see the condition yet?

Use an allowance with clear assumptions or a two-step change: a small approval to open/inspect, then a final price once conditions are confirmed.

What if the homeowner refuses to sign?

Don’t proceed. Send a short written summary: “We’re paused pending written approval.” Protecting the relationship is good—protecting the business is required.

Want to generate client-ready change orders faster? EstimationPro turns site photos + notes into clean, line-item estimates: https://estimationpro.ai