A change order is a written price for work that isn't on the quote, approved before you do it and billed on the next invoice; one custom home builder we studied found that about $1.4 million of changes done without a real one had made him just $32,000. Skip any of those three steps and the extra work is usually free.
Below: what happens when changes aren't priced, what counts as a change in 8 trades (with prices for the common surprises), how to price one, a clause to copy and a one-page template.
What happens when changes aren't priced or written down
Extra work done without a written price and a markup earns almost nothing, even when the amount of work is large. The builder above did every change a homeowner asked for on a $4.2 million house, barely marked them up, and only checked the numbers at the end. The changes added about $1.4 million and six months, and $32,000 of profit on $1.4 million is about 2.3%. After the extra insurance and site rentals, he thinks they probably lost money.
Here is the same problem on a small job. Say you quote a $4,000 bathroom repaint and the customer asks you to "also do the hallway" while you're there. It takes you 6 hours and $80 of paint. If you never write it down, you bill nothing and the $4,000 job now pays for 6 more hours. If your break-even rate is $50 an hour, that is $380 of cost you ate, before any profit.
What the builder changed once he saw the numbers:
| What they changed | Before | After |
|---|---|---|
| Markup on changes | Barely any | 35 to 45%, more than the house itself (margins in the high teens) |
| Schedule | Not written down | Days added written on every change order |
| Billing | At the end | On the next draw, typically within a week |
| Building the change | Before payment | Only after it's paid |
| Haggling | Negotiated | If it's too expensive, skip it and keep building |
The same math holds at any size: a $400 extra on a $4,000 job is 10% of the job either way.
Why extras agreed out loud don't get paid
Once the extra work is in the wall, the customer holds all the bargaining power over its price. A contractor who says "we'll settle the price later" and does the work has already given away the one thing that gets a price agreed: the choice not to do it.
The fix is a simple rule: no extra work starts without a written price and a written yes. On commercial jobs, the contract often means an unsigned extra is never owed at all. On a small residential job, the risk looks like this: the customer asks, while the machine or the ladder is already there, for one more small thing. It's never five minutes, and your time and equipment cost money every hour they run.
What counts as a change in 8 trades, with prices
Anything not written in the quote's scope is a change, and the common ones in each trade can be priced before the job starts. Putting that price in your terms means the customer has already seen it when the surprise shows up.
| Trade | Common change | Price or rule | Where the number comes from |
|---|---|---|---|
| Roofing | Rotten decking after tear-off | $85 a sheet installed, photos first | Roofing calculator example terms |
| Roofing | Second layer of shingles under the first | $65 a square as a written change order | Roofing calculator example terms |
| Painting | Extra colours past the number on the contract | 1 gallon + 1 hour per extra colour | One painting owner's rule |
| Painting | Rot found on an exterior | Added about $1,700 on one house | One painting estimate we studied |
| Drywall | Walls taller than the plans, vaults | A $17,000 price became $26,000 to $27,000 | One drywall owner's job |
| Drywall | A reveal nobody priced | About $500 per reveal | One drywall estimator |
| Plumbing | Seized old valve at the tie-in | Up to 3 hours to get it out | One plumbing owner |
| Fencing | Rock, old footings or roots in a post hole | Charged per hole | One fence owner's rule |
| Pressure washing | Moving the customer's patio furniture | $100 | One pressure washing owner |
| House cleaning | A visit that needs more time | $58 per cleaner per hour, approved first | One cleaning owner's rate |
| Lawn care | A narrow gate forcing the push mower | Plus $5 a visit | One lawn care owner |
Two of these show why writing the scope down matters. If the painting estimate says three colours, a fourth colour is plainly a change, and nobody has to argue about it. And an old valve at a plumbing tie-in can look like a 20-minute swap until it won't turn; at a $69.95 break-even rate, 3 hours of fighting it is about $210 of cost that a flat price would have swallowed.
How to price a change order
Price the change the same way as the original job, then add for the disruption, because the same work costs more once the job is underway. Don't guess on the spot; send the price within the day.
| Line | How to price it | Where it's explained |
|---|---|---|
| Labour | Hours x your break-even rate, not the wage | True hourly rate guide and free rate calculator |
| Materials | Today's price, small quantities, plus the extra supply run | Your price list |
| Paperwork | Writing it up, getting approval, billing: real time | Count it like any other hour |
| Working around finished work | The same wiring or trim costs more once walls are closed or paint is on | Add hours for the extra care |
| Profit | Your normal markup or more | Markup vs margin |
| Days added | Written on the change order | The template below |
Here is the hallway from earlier, priced properly: 6 hours x $50 = $300 of labour, $80 of paint plus a 25% markup = $100, half an hour of paperwork = $25, total cost $425. Price it for a 25% margin and it is $425 / 0.75 = $566.67, written down and approved before the first coat.
After the job, job costing shows whether the changes actually made money.
Credits for removed work are not the reverse of extras
Removing work costs time too, so a credit is the original line price minus the cost of taking it out, not the full price. Say a light fixture was quoted at under an hour of labour. Once it is already installed, taking it out means shutting off the circuit, removing the fixture, capping the wires, patching the box and updating the paperwork, and that can take several times the hours it was priced at.
If the material is already bought or cut, it isn't credited at all unless you can return it.
A change order clause you can copy
Put one short paragraph in the terms of every quote so the customer agrees to the process before any change comes up. It's plain on purpose, so it gets read. This is sample wording, not legal advice; have a local lawyer check it if your jobs are large.
Changes to the work. This price covers only the work written on this quote. If you ask for anything added or changed, or if we find a hidden problem once work starts (for example rot, rock or old damage), we will stop and give you a written change order with the price and any extra days. We only do that work after you approve it in writing, by signature or by a text or email that says yes to that price. Approved changes are billed on the next invoice. Verbal requests are not included in this price.
Each of our trade calculators writes its own version of this into the customer terms, with that trade's usual surprises named.
A change order template, one page or one text
Eight fields are enough, and a text message with all eight plus a written yes does the job on small residential work.
| Field | Example |
|---|---|
| Change order # and date | CO-3, June 12 |
| Original quote # | Q-2041 |
| What's changing | Replace 6 sheets of rotten roof decking found after tear-off |
| Why | Hidden condition, photos sent |
| Price of this change | 6 x $85 = $510 |
| Days added | 0 |
| New job total | $14,599 + $510 = $15,109 |
| Approved by | Name, signature or written yes |
The example uses the roofing calculator's 20-square sample job ($14,599) and its example decking price. Keep a running list on each job so that when it ends, every change is already approved and billed. Whether to give a fixed quote or an estimate in the first place is covered in quote vs estimate.