How do I price a change order and get it signed before work starts?
Short answer
Price it like a mini bid, cost plus your normal markup, and get a signature before a single hour goes into it. No signature, no work.
Price it like a new bid, not a favor
A change order is a small new job. Take the material cost, the labor hours at your real rate, and add your normal markup on top, the same percentage you use on the base contract. Do not discount it because it feels like an add-on, it costs you the same overhead it always did.
Write it on paper with a number and a one-line scope description. Vague change orders ('added tile work, $800') come back to bite you when the homeowner remembers it differently than you did.
The rule that saves you
Nothing outside the original scope gets touched until the change order is signed and, ideally, paid or added to the next draw. This has to be a rule you follow even when the ask seems small, because small asks are exactly how a job goes from profitable to break-even.
Keep a pad of pre-printed change order forms in the truck. If it takes you ten minutes to write one up on site, you will actually do it instead of promising to 'get to it later.'
Presenting a change order on site
Homeowner asks for something extra mid-walkthrough.
Customer
“Can you just move that outlet while you're in there? Shouldn't take long.”
You
“I can, happy to. It's outside the original scope though, so I'll write it up real quick, it'll be about $180 with the drywall patch. Sound good?”
Customer
“Sure, whatever it costs.”
You
“Great, I'll have it ready in ten minutes. Once you sign it I'll have my guy do it today.”
Do not say
- “I'll just throw it in, don't worry about it (this is how you end up eating hundreds of dollars a week).”
Change order math
| Material cost | $220 |
|---|---|
| Labor (2 hrs x $65 loaded rate) | $130 |
| Subtotal | $350 |
| Markup at 30% | $105 |
| Change order priceSame markup as your base contract, not a discount rate | $455 |
The math: (Material + Labor) x (1 + your standard markup) = change order price.
One-page change order form
CHANGE ORDER #___ Project: ______________________ Date: ______________________ Description of additional work: _______________________________________________ _______________________________________________ Additional cost: $__________ Additional time added to schedule: __________ days This change order is in addition to the original contract dated __________. Work on this change order will not begin until this form is signed. Homeowner signature: __________________ Date: __________ Contractor signature: __________________ Date: __________
Where owners get this wrong
- Doing the work first and writing it up later, when memory of the price gets fuzzy.
- Pricing change orders at cost because it feels awkward to mark up 'a small favor.'
- Verbal change orders with no paper trail.
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