Change orders
How to Price Change Orders Without Losing the Customer
7 min read
The change order is where contractors make or lose their profit margin. The original job gets priced carefully. The additions get handled with a text message and a hope. Six weeks later you're staring at an invoice that doesn't reflect the work you actually did.
This guide covers how to price change orders correctly, how to present them so customers say yes, and how to protect yourself when they push back.
Why Change Orders Kill Profit
Your original quote has a margin built in. The change order usually doesn't, because it gets added in a hurry while you're on-site and trying to keep the job moving.
The math is worse than it looks. If you're running a 20% margin on a $5,000 job and you do $800 of change order work at cost just to "keep the customer happy," your margin on the whole job just dropped to 12%. Do that on three jobs a month and you've worked yourself into a break-even business. Our contractor profit margin guide shows what healthy margins look like by trade.
Every change order needs the same margin as the original job. The customer asked for additional work. They expect to pay for it.
What Belongs in a Change Order
Anything that wasn't in the original written scope of work. That includes:
- Work discovered after opening walls, ceilings, or slabs
- Customer requests added after the original quote was signed
- Code requirements found during inspection that weren't anticipated
- Material substitutions that cost more than the original spec
- Delays caused by the customer that increase your labor cost
The key phrase is "wasn't in the original written scope." This is why your original quote needs a detailed scope of work section, not just a price. Vague scopes create change order arguments. Detailed scopes make it obvious when something is extra. For the full checklist, see what to include in a change order.
How to Price a Change Order
Same formula as your original job:
Don't price change orders on the fly in your head. Walk through each component. A "quick" addition that takes two hours of labor, $150 in materials, and a separate supply run is a $500+ change order when you price it properly. If you need a refresher on the formula, read how to price a job correctly.
Common mistakes:
- Charging labor only and forgetting materials markup
- Forgetting the supply run time
- Not charging for the disruption to your schedule
- Applying a lower margin than the original job because it "feels awkward"
How to Present a Change Order So the Customer Says Yes
The way you present it matters as much as the number.
Don't: "Hey while I'm here I found some extra stuff so it's going to be more money."
Do: Stop work. Take a photo of what you found. Contact the customer directly — call or text with the photo. Explain what you found, why it needs to be addressed, and what happens if it isn't. Give them a firm price. Send a written change order for their signature before you proceed.
That process — stop, document, explain, price, sign — protects you legally and actually increases customer approval rates. People say yes to professionals who explain things clearly. They push back on contractors who surprise them with a higher invoice at the end.
The "Just Add It to the Bill" Customer
Some customers wave off the change order conversation with "yeah yeah just do it, we'll settle up at the end." That is a trap.
By the end of the job, $200 of extras have become $1,500 of extras and the customer remembers none of them. Or they remember them differently than you do. Or they've decided they don't want to pay for them.
Your answer: "I appreciate you trusting me — let me shoot you a quick text with the price and you can just reply yes. That way we're both protected."
It takes 60 seconds. It protects you completely.
What to Do When a Customer Refuses a Change Order
First, understand why. Sometimes it's sticker shock, sometimes it's a cash flow issue, sometimes they genuinely didn't expect the additional work to cost that much.
Your options:
- Explain the alternative. If the change order is for something code-required or structurally necessary, explain what happens if it doesn't get done. A customer who understands the risk usually approves the work.
- Break it up. If the change order is large, offer to do the critical portion now and schedule the rest. This is better than discounting.
- Don't do the work without approval. If they won't sign a change order and the work is optional, don't do it. You have no legal recourse for work done without written authorization in most states.
- Walk away from the addition. If it's truly optional work and the customer won't approve it at a fair price, skip it and finish the original job. An underpaid addition is worse than no addition.
Building Change Orders Into Your Process From Day One
The contractors who handle change orders best aren't better negotiators — they just built a clear process before the job started.
On every job, before work begins:
- Give the customer a written quote with a detailed scope of work
- Include a line that says additional work not in this scope will be quoted separately before proceeding
- Collect a deposit
- Have both parties sign
When that's your standard process, change orders aren't a confrontation — they're just the next step in a process the customer already agreed to. TradeShield's change order management keeps the original job and every signed addition in one place.
Frequently asked questions
How much should I charge for a change order?
The same margin you charge on the original job. Price labor, materials, and overhead the same way you did the original quote. Don't discount change orders because they feel awkward to present — they're legitimate additional work.
Do I need a written change order for small additions?
Yes, even small ones. A text message confirming the price and getting a "yes" reply counts as written authorization in most states. The dollar amount doesn't matter — what matters is that you have documented approval before you do the work.
What if the customer refuses to sign a change order?
Don't do the additional work. Finish the original scope and invoice for that. You have no legal protection for work done without written authorization, and you're unlikely to get paid for it.
Can I charge for delays caused by the customer?
Yes. Customer-caused delays — late material decisions, access issues, scope changes that pause work — are legitimate change order items. Document the delay, the cause, and the cost impact before presenting it.
How do I handle a change order for work discovered after opening a wall?
Stop work, photograph what you found, contact the customer before proceeding, and present a written change order with a firm price. Most customers will approve necessary work when it's presented professionally. The ones who don't would have disputed the invoice anyway — better to know before you do the work.