What drives a general contractor's price
How contractors build a remodel price, what the management fee covers, and the seven factors that explain why two bids on the same project differ.
By Elijah Canfield, Founder, Hire Best Pros · Updated September 9, 2026
Elijah Canfield is the founder of Hire Best Pros. He writes and edits the site's consumer guides, with a focus on how home service and moving projects are priced, scoped and compared.
A general contractor's price is the cost of labor and materials for every trade on the job plus a management fee for running it. There is no useful national average, because the same kitchen costs different amounts in different markets, in different houses and at different finish levels. What you can compare is how each bid is built: the scope, the allowances, the contingency and what happens when something unexpected is found.
Key points
- Compare bids on scope and assumptions before you compare totals.
- An allowance is a placeholder, not a price. Ask what it actually buys.
- The lowest bid is often the one with the least written down.
Seven factors that move the number
- Project size and how many trades are involved
- Finish level, from builder grade to custom
- Structural work, since moving load bearing walls adds engineering and framing
- Mechanical work, since relocating plumbing, ductwork or panels is slow work
- Condition of the existing house, including age, wiring, insulation and surprises behind walls
- Access and site constraints, such as stairs, tight lots and occupied homes
- Local labor rates, permit costs and inspection requirements
How the management fee usually works
Most contracts are cost plus a percentage, a fixed price, or a fixed price with stated allowances. Cost plus is transparent about materials and labor and leaves the total open. Fixed price gives you a number and puts the estimating risk on the contractor, which is priced in.
Neither is inherently better. What matters is that you know which one you signed and how change orders are priced under it.
Allowances and contingencies
An allowance is a budget placeholder for a selection you have not made yet, such as tile or fixtures. Two bids with different allowances are not comparable, and a low allowance is the easiest way to make a bid look cheaper.
A contingency is money set aside for what the crew finds after demolition. Older homes hide more, and a contract with no contingency simply moves that conversation to a change order later.
Want quotes you can actually compare?
Get remodeling quotesQuestions that keep bids comparable
- Is this cost plus, fixed price or fixed price with allowances?
- What allowances are included and what do they cover per unit?
- What is excluded from this scope entirely?
- How are change orders priced and approved?
- What is the payment schedule and what milestone triggers each payment?
- Who pulls permits and is that cost included?
Common questions
- Is a percentage fee or a fixed price better?
- It depends on how defined the project is. A well specified project suits a fixed price. A project with unknowns behind the walls often runs more honestly on cost plus with a clear cap or contingency.
- Why is one bid so much lower?
- Usually because it assumes less: lower allowances, fewer inclusions, no contingency, or work that will come back as change orders. Read the scope side by side before assuming it is a better deal.
- How much should I hold back until the end?
- Payment schedules should be tied to milestones with a final payment after the punch list is complete. Never pay the full amount before the work is finished and inspected.