Pricing Guide
As a general contractor, pricing is as critical to a construction project as expertise and experience. We are responsible for ensuring our projects remain financially viable for our clients, and that starts with a comprehensive budget.
Establishing rates as a licensed contractor guarantees fair compensation for services provided and enables clear communication with clients, eliminating any ambiguity regarding costs and ensuring transparency for all parties.
Our contractor pricing guide equips you with the knowledge to understand how GCs price construction projects. By sharing the different pricing models, we hope to help you gain confidence when moving forward with your construction project.
Different Pricing Models:
Every project is unique, demanding a tailored pricing strategy. We employ various pricing approaches to serve the needs of our clients.
- Fixed-Price Contracts:
Best suited for clearly defined projects, fixed-price contracts offer peace of mind to clients by providing pricing upfront. We take our time to define and estimate all scope prior to starting, and provide allowances to accommodate for unforeseen circumstances.
- Unit Price Contracts:
Breaking down project costs into itemized units, this model offers transparency and flexibility, ideal for projects with evolving scopes. By pricing each component separately, we help our clients have a clearer understanding of total costs so they can make informed decisions.
- Cost-Plus Contracts:
Guaranteeing coverage of all expenses plus a predefined profit, cost-plus contracts ensure transparency and accommodate project changes. These contracts are suitable for projects subject to alterations, offering insight into costs and profit margins, fostering trust with clients.
- Time and Materials Contracts (T&M):
Charging based on hourly or daily rates, T&M contracts cover labor, materials, and business expenses, providing fair compensation for fluctuating project requirements. Although challenging due to project variability, T&M contracts suit jobs with undefined specifications.
Determining Your Pricing:
General contractors typically aim for a markup percentage between 15-20% on new construction and 20-30% on remodel projects.
This markup, or GC fee, is based on the total construction costs and project complexity. The larger the total project costs and simpler the project, the lower the percentage. Large, $3+ million dollar projects may come in as low as 12-15%.
Considerations such as project complexity, geographical factors, and finish selections influence pricing. We spend around 40 hours with each client discussing selections and goals in order to finalize an accurate budget.
While itis very difficult to accurately “ballpark” a large construction project without defining all the scope involved, most custom homes average between $300-1,000/SF. The more challenging the lot, complex the design, and/or expensive the finishes the more $/SF.
When developing a design, consider the gross rather than net square footage. While garages, decks, and storage areas do not typically cost as much per SF as living spaces, they do impact the budget more than most folks imagine.
Reach out if you would like to hire us to support you in developing a budget for your project!
