General Contractor Costs
What the middle of your bid is made of, and how to compare numbers that arrive shaped differently.
What you pay a GC for, in numbers
Every remodeling search in our demand data eventually lands on the money question, so here it is plainly. A general contractor's price contains the subcontractors and materials, plus overhead and profit, the markup that pays for estimating, supervision, scheduling, insurance, warranty and the business itself. Commonly cited GC markup runs around 10 to 20 percent of project cost, with small and complicated jobs toward the high side.
Bids arrive in two main shapes. Fixed price wraps everything into one number: you get certainty, the contractor carries the risk, and the price includes a cushion for that risk. Cost plus bills actual costs plus an agreed fee: transparent and flexible, but the total floats until the end. For defined scopes, fixed price with clear allowances is the standard homeowner choice; cost plus suits genuinely uncertain work like old-house gut jobs.
Allowances and change orders are where comparable bids stop being comparable. An allowance is a placeholder, say a set amount for tile or fixtures, and unrealistic low allowances make a bid look cheap while guaranteeing overruns. Change orders price mid-project scope changes; how they are marked up belongs in the contract before anyone signs, because that is where underpriced bids make their money back.
The pricing structures you will see
Each is legitimate. Each moves risk differently. Know which one your bid is.
Fixed price (lump sum)
One number for a defined scope. Certainty for you, risk premium for them. Lives and dies on how tight the scope document is.
Cost plus fee
Actual costs plus an agreed percentage or flat fee. Transparent, flexible and open-ended; insist on documentation and often a cap.
Cost plus with guaranteed maximum
The hybrid: transparency below a ceiling the contractor guarantees. Common on larger custom work.
Time and materials
Hourly labor plus materials, for small or exploratory jobs. Fine for a week of work; unmanaged risk for a summer of it.
Allowances
Placeholders for unselected items. Compare them line by line across bids; low allowances are how bids get bought.
Change orders
Priced amendments for new scope. Agreed markup and written approval before work proceeds is the rule that protects both sides.
What does it cost?
As commonly published ballparks: general contractor overhead and profit typically runs 10 to 20 percent of project cost, project management fees on smaller jobs are sometimes flat, and design-build firms fold design fees into the total. None of this is padding; it is the price of a managed project.
The comparison discipline that works: normalize competing bids to one scope, align every allowance, and ask each contractor what is excluded. The cheapest normalized bid is often not the one with the smallest bottom line as first printed.
Ballparks based on commonly published national averages, stated as assumptions, not measured local pricing. Your competing quotes set the real number for your home and ZIP.
How to hire for general contracting work
Who does the work
A general contractor for multi-trade scope, priced fixed against a written scope wherever the work is definable. Reserve cost-plus structures for genuinely unknowable conditions, and get the fee and documentation rules in writing.
What pros will ask
Your scope document, drawings if any, selections or realistic allowance expectations, budget band and schedule constraints. The tighter your inputs, the tighter and more comparable the numbers that come back.
What to check before signing
That every bid shows line items, allowance amounts, exclusions, the payment schedule and change-order markup. Then compare like against like: same scope, same allowances, same exclusions. Differences that survive normalization are real information about the contractor.
Related searches homeowners make
Pulled from the same demand data behind our General Contractors, Home Remodeling and Additions category.
General Contractor Costs questions, answered straight
What markup do general contractors charge?
Commonly cited overhead and profit runs around 10 to 20 percent of project cost, higher on small or complex jobs. In fixed bids it is baked into the number; in cost-plus contracts it is stated. Either way you are paying it, so judge the value of the operation behind it.
Is cost plus better than a fixed bid?
For defined scopes, fixed price is usually the homeowner's friend: certainty beats theoretical savings. Cost plus earns its place on unpredictable work, old houses, unknown structure, evolving design, ideally with a guaranteed maximum and full documentation rights.
Why did my project cost more than the bid?
Almost always allowances and change orders: allowances set too low for real selections, and mid-project additions priced at contract markup. Both are controllable up front, with realistic allowances and a written change-order process, which is why this page keeps repeating those words.
How should payments be scheduled?
Tied to completed milestones, demolition done, rough-ins passed, drywall closed, substantial completion, with a modest deposit and a real final payment held for the punch list. Payment schedules that run ahead of work are the mechanism of most contractor disputes.
Do I save money buying materials myself?
Sometimes on finish items you enjoy selecting, but you also inherit delivery timing, returns and defect risk that contractor-supplied materials include. Discuss it openly; many GCs accommodate owner-supplied finishes and still warranty the labor.
Get quotes for your remodeling or addition project
Free for homeowners. No obligation. Up to four local general contractors compete.
Keep planning your project
More guides from the General Contractors, Home Remodeling and Additions hub.