📝 Change Order Markup Calculator
Price change orders correctly — because underpriced COs kill margins.
Standard Markup Components
| Component | Typical Range | Purpose |
|---|---|---|
| Direct Costs | 100% | Labor, material, equipment, subs |
| Overhead | 10-15% | Office costs, supervision, insurance |
| Profit | 10-15% | Your margin |
| Total Markup | 20-30% | On direct costs |
Contract-Allowed Markups
Check your contract! Common allowances:
| Contract Type | Typical Markup |
|---|---|
| AIA A201 | 15% overhead + profit combined |
| Federal (FAR) | 10% overhead, 10% profit |
| ConsensusDocs | 15% combined |
| California Public | 15% combined (often) |
Markup percentages are negotiated and vary. Always verify against your specific contract before pricing.
Calculating Total CO Price
Method 1: Combined Markup
Total Price = Direct Costs × (1 + Combined Markup %)
Example: $10,000 direct costs × 1.15 = $11,500
Method 2: Separate O&P
Overhead = Direct Costs × Overhead %
Profit = (Direct Costs + Overhead) × Profit %
Total = Direct Costs + Overhead + Profit
Example:
- Direct costs: $10,000
- Overhead (10%): $1,000
- Subtotal: $11,000
- Profit (10%): $1,100
- Total: $12,100
Note: Method 2 yields slightly more — verify which your contract requires.
What's Included in "Direct Costs"
| Include | Don't Include |
|---|---|
| Labor (burdened) | Unburdened wages |
| Materials delivered | Stored materials (already billed) |
| Equipment rental | Owned equipment depreciation |
| Subcontractor costs | Overhead costs |
| Permits | Office salaries |
| Testing/inspection | Insurance premiums |
Subcontractor Markup
When passing through sub COs, you can typically add:
| Tier | Markup |
|---|---|
| Sub's direct cost | Sub applies their markup |
| GC on sub's total | 5-10% (check contract) |
Example:
- Sub's CO: $5,000 labor + materials
- Sub's markup (15%): $750
- Sub's total: $5,750
- GC markup (10%): $575
- Total to owner: $6,325
Time & Materials COs
For T&M change orders:
| Component | Rate |
|---|---|
| Labor | Burdened rate + markup |
| Materials | Cost + markup (10-15%) |
| Equipment | Rental rate or blue book |
| Small tools | 2-5% of labor |
Document everything: Daily tickets, receipts, time sheets
Equipment Rates
| Method | When to Use |
|---|---|
| Rental rate | If equipment is rented |
| Blue Book | Industry standard rates |
| Contract schedule | If rates are scheduled |
Don't forget: Equipment requires operators (labor cost)
Pricing a Sample Change Order
Scenario: Add blocking for TV mounts (wasn't in drawings)
| Item | Quantity | Unit | Rate | Extension |
|---|---|---|---|---|
| Carpenter labor | 8 hrs | HR | $65 | $520 |
| Material (2×6 blocking) | 40 LF | LF | $2.50 | $100 |
| Hardware | 1 | LS | $25 | $25 |
| Direct Cost | $645 | |||
| Overhead (15%) | $96.75 | |||
| Profit (10%) | $74.18 | |||
| Total | $815.93 |
Round to: $816.00
Common Pricing Mistakes
1. Forgetting Labor Burden
Raw wage: $30/hour Burdened: $42/hour Difference on 8 hours: $96 lost
2. Underestimating Disruption
Add a "lost productivity" factor for work in occupied spaces or sequence disruption (10-20%).
3. No Mobilization Cost
If the CO requires a separate trip, include mob/demob.
4. Missing Small Costs
- Layout time
- Protection of adjacent work
- Cleanup
- Coordination meetings
Disputed Markups
If owner disputes your markup:
- Reference contract terms
- Show industry standards
- Break down actual overhead costs
- Negotiate but document agreement