Is My Change Order Too High?

Why change orders exist — and why they're often inflated

Legitimate change orders happen. Hidden rot behind a wall, an outdated electrical panel that needs upgrading before new circuits can be added, structural issues discovered during demo. These are real costs that couldn't be known at bid time. But change orders are also the single most common way contractors make up margin on a low bid. Research from Rhumbix shows 85% of construction projects experience cost overruns,1 and change orders account for 10–15% of total contract value on average.2 A contractor who wins work at a thin price knows the margin is in the extras. The pattern is consistent: bid low, win the job, then present change orders for work that was always going to be necessary. By that point the homeowner has paid a deposit, disrupted their home, and has little leverage to walk away. Understanding which category your change order falls into is the entire exercise.

What a legitimate change order looks like

A legitimate change order has three characteristics. First, it covers genuinely unforeseen work — something that couldn't have been identified during a normal pre-bid walkthrough. Second, it includes a clear line-item breakdown: what work is being added, how many hours at what rate, what materials at what cost. According to Bauwise,2 for optimal transparency and fairness, contractors must itemize their prices in detail in any change order proposal — lump-sum proposals can obscure costs and should be approached with caution. Third, it's priced at the same rate as the original contract — not at a premium because you're mid-project and can't easily switch contractors. If a change order shows up as a single lump number with no breakdown, that's not a legitimate change order. That's a request for trust you haven't been given a reason to extend.

The three questions to ask before signing any change order

1. 01

   What specifically caused this cost?

   You're entitled to understand exactly what was found or changed that requires additional work. “Unexpected issues” is not an answer. “We found 6 linear feet of rotted sill plate behind the shower wall that needs to be replaced before tile can go in” is an answer. If a contractor can't tell you specifically what changed and why it adds cost, that's a signal.

2. 02

   Can you show me the labor hours and materials cost separately?

   The same transparency test that applies to original quotes applies here. A contractor with nothing to hide will break it out. If the change order is for $3,800 of electrical work, you should be able to see how many hours at what rate and what materials at what cost. Research from Angi confirms that residential GC markup on materials typically runs 7.5–20%.5 Anything above 25% on a change order line is worth a conversation.

3. 03

   Is this priced at the same rate as my original contract?

   Change orders should use the same labor rates as the original bid. Mid-project is not when you renegotiate upward. If the hourly rate has jumped from what's implied in the original quote, ask why. Acton ADU confirms that contractors typically add 20% to change order costs as standard markup6 — above that, ask for justification.

Common change order red flags — what to watch for

1. 01
   Lump sum with no line items

   Bauwise construction research confirms that lump-sum change order proposals should be approached with caution — they obscure whether you're paying fair rates or funding a contractor's margin recovery.2

2. 02
   Work that was foreseeable

   If a contractor doing a bathroom remodel “discovers” the plumbing needs updating, ask why that wasn't visible during the original walkthrough — foreseeable conditions should have been in the original scope.

3. 03
   Pressure to approve immediately

   Legitimate additional costs don't disappear in 24 hours. Any contractor creating urgency around a change order approval is limiting your ability to evaluate it — which is the point.

4. 04
   Materials marked up significantly above retail

   You can verify material costs at Home Depot or a supplier. Research from Angi shows residential materials markup typically runs 7.5–20%.5 Above 25% is worth a conversation.

5. 05
   A rate higher than the original contract

   Change orders should use the same labor rates as the original bid. A mid-project rate increase is not standard practice — it's opportunistic.

6. 06
   No written document

   Verbal approvals are how disputes start. Every change order must be in writing and signed before work proceeds. In many states this is a legal requirement under home improvement consumer protection laws.8

What to say to your contractor

The script that works. Before approving any change order, say this:

"I want to understand this change order before I approve it. Can you walk me through what specifically was found, the labor hours and rate, and the materials cost broken out separately? I'm not questioning your work — I just need to understand what I'm approving before I sign."

If they push back, say this:

"I understand you want to keep the project moving and so do I. I'll have an answer for you within 24 hours. I just need the breakdown first."

If they refuse to provide a breakdown, that's the most important piece of information they've given you. A contractor confident in their pricing will provide it without hesitation. Asking for line-item detail is a transparency test as much as a pricing exercise. Contractors with nothing to hide will provide it readily.

Common questions about contractor change orders