How to Calculate Change Order Markup That Protects Your Margin
Change orders are the moment of truth in a construction project. The owner wants something different, you've already mobilized, your schedule has been disrupted, and you have maybe 48 hours to price it. Contractors who consistently under-markup change orders do it for the same reason: they anchor to their original bid markup. The original markup was designed to cover the cost of doing the planned work in the planned sequence. A change order is not that. It's a disruption event with its own overhead profile - re-scheduling, re-sequencing trades, stopping current work, pricing time, documentation, approval chasing, and then re-mobilizing. None of that disruption cost was priced into the original markup.
This guide breaks down how to build a change order markup that covers your actual costs, walks through a before-and-after scenario on a $5,000 change order, and explains the markup components that most contractors leave out of their calculation. Use the BidFlow Change Order Markup Calculator to run your line items with per-category markups and an overall overhead and profit layer on top.