Step 1: Price the labor at your billable rate
Estimate the hours and multiply by your billable rate, not the wage you pay. If you do not know your rate, see how to calculate labor cost. Example: 6 hours × $70 = $420.
Step 2: Add a disruption allowance
Extra work mid-job is slower than the same work bid up front: the crew stops and restarts, materials come in small orders, other tasks move. Add a percentage of the labor to cover it. Use a figure from your own jobs; this example uses 10% of $420 = $42.
Step 3: Add materials with your markup
Price materials the same way as on the main bid. Example: $300 × 1.20 = $360 (a 20% markup). Remember that a 20% markup is only a 16.7% margin; see markup vs margin.
Step 4: Total it
| Labor: 6 h × $70 | $420 |
| Disruption: 10% of $420 | $42 |
| Materials: $300 × 1.20 | $360 |
| Change order price | $822 |
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Priced "at cost" (6 hours of time plus $300 of materials = $720), the same extra would bring in $102 less, and that is before any overhead.
Step 5: Get it signed first
Write a short change order: what is being added or removed, the price, any change to the finish date, and when it will be paid (for example, with the next progress payment). Get the customer's signature or written approval before the work starts. Check your state's rules and your contract for any required wording.
Run your own numbers with the change order calculator. If the extra changes the payment plan, the deposit and payment schedule calculator helps. The full bidding method is in how to price a contractor job.
Want it built into your quotes?
The Contractor Quote & Margin Sheet takes hours, labor cost, materials and overhead and prices each job from your target margin in Google Sheets or Excel.
Figures are illustrative estimates for planning only. This is not accounting, tax or legal advice.