SMALL BUSINESS GUIDE
How should I price a change order?
Short answer: price a change order as new work, not as a casual add-on. Capture added materials, labor, subcontractors, equipment, admin and schedule impact before work proceeds.
Define the changed scope first
Write down exactly what is being added, removed or altered. A clear scope protects both the customer and the business from disagreement later.
Recalculate direct costs
- Additional materials and delivery
- Extra productive labor hours
- Subcontractors, permits or rentals
- Demolition, disposal or rework created by the change
Account for disruption
A change can cost more than the visible work. Remobilization, rescheduling, additional purchasing, new drawings and delays can consume capacity that was not included in the original price.
Change-order price = added direct costs + required contribution for added productive time + justified disruption/risk
Do not rely on the original job margin
If the original project was priced tightly, absorbing a change can make the whole job worse. Test the change on its own economics before agreeing to it.
Get approval before performing the work
Document the scope and price, then obtain customer approval. That makes the final invoice easier to understand and reduces surprise.
Put the numbers to work
JJL Business Tools helps turn your actual costs, time and goals into practical pricing and job decisions.
Open Change Orders