How to Handle Change Orders on a Job
You're three days into a bathroom remodel. The tile is ordered, the plumbing is roughed in, and everything is on schedule. Then the homeowner walks in and says: "While you're at it, can you move the toilet to the other wall?"
That sentence just added $2,500 and four days to your project. The question is: will you get paid for it?
Change orders are the single biggest source of profit loss for contractors. Not because the work itself is unprofitable — but because contractors do the extra work without documenting it, pricing it, or getting approval before they start.
Here's how to handle change orders so you get paid for every change, every time.
What Is a Change Order?
A change order is any modification to the original scope of work after the contract is signed. It can be:
- **Addition:** Customer wants something not in the original scope ("add an outlet in the island")
- **Deletion:** Customer removes something from the scope ("skip the backsplash, we'll do it later")
- **Modification:** Customer changes a spec ("actually, we want quartz instead of granite")
All three types require documentation. Additions and modifications usually increase cost. Deletions may decrease cost — but not always, if materials were already ordered.
Why Contractors Lose Money on Change Orders
The "While You're Here" Trap
Customers ask for small additions as if they're trivial. "While you're here, can you also..." feels like a small request. But small requests add up:
- "Add a light switch here" = $150
- "Can you move that outlet up 6 inches?" = $85
- "We changed our mind on the faucet — can you swap it?" = $120 in labor
- "Actually, add a GFCI outlet on the porch too" = $175
Four "small" requests = $530 in unbilled work. Multiply that across 20 projects a year and you've given away $10,600.
The Verbal Agreement Problem
The customer says "go ahead" on the phone. You do the work. When the invoice comes, they say "I didn't agree to that" or "I thought that was included."
Without written documentation, you have no leg to stand on. Your word against theirs. And in a dispute, the contractor without paperwork loses.
The "I'll Figure Out the Price Later" Problem
You agree to the change, do the work, and then try to figure out what to charge. By now you've forgotten exactly how long it took. You lowball it to avoid conflict. The customer still thinks it's too much because they had no price expectation.
The Change Order Process (Step by Step)
Step 1: Stop and Document
When a customer requests a change — any change — stop and write it down before doing anything.
Document: - What the customer is requesting - How it differs from the original scope - Date and time of the request
This takes 60 seconds. It prevents 60 hours of disputes.
Step 2: Price the Change
Calculate the cost of the change order before presenting it. Include:
**Additional materials:** - New materials needed - Materials wasted because of the change - Return fees for materials no longer needed
**Additional labor:** - Time to do the new work - Time to undo any existing work affected - Time to coordinate with subs if applicable
**Schedule impact:** - How many days this adds to the project - Any delay costs (crane rental extends another day, etc.)
Example: Customer wants to relocate a toilet from one wall to another.
- Plumbing rough-in for new location: 4 hours at $95/hr = $380
- Demo existing plumbing (already installed): 2 hours at $95/hr = $190
- New drain pipe and fittings: $185
- Patch subfloor at original location: 1 hour at $75/hr = $75
- Additional permit inspection: $50
- **Change order total: $880**
- **Schedule impact: +2 days**
Step 3: Present in Writing
Send the change order to the customer in writing. Email is fine. Text with a follow-up email is better.
The change order document should include: - Description of the change - Reason for the change - Cost impact (itemized) - Schedule impact - Approval line (signature or written confirmation)
Template:
"Change Order #1 — [Project Name] Date: [Date]
Description: Relocate toilet from south wall to north wall per owner's request.
Cost impact: - Plumbing labor (demolition + new rough-in): $570 - Materials (drain pipe, fittings): $185 - Subfloor patch labor: $75 - Additional inspection: $50 - Total: $880
Schedule impact: +2 business days (new completion date: [date])
Approval: Please reply 'Approved' or sign below to authorize this change. Work will not proceed on this change until approval is received."
Step 4: Get Written Approval Before Starting
This is the most important step. Do not start the changed work until you have written approval.
Acceptable approval: - Signed change order form - Email reply saying "Approved" or equivalent - Text message confirming approval (screenshot and save it)
Not acceptable: - Verbal "go ahead" - Head nod - "Just do it, we'll figure it out"
If the customer won't approve in writing, don't do the work. Politely explain: "I need written approval on change orders to protect both of us. It takes 10 seconds — just reply 'Approved' to this email."
Step 5: Execute and Document
Do the work. Document it with photos. Note the actual time spent (in case it differs from the estimate).
Step 6: Invoice the Change Order
Add the change order to the project invoice as a separate line item. Don't bury it in the original scope pricing.
On the invoice: - Original contract: $28,000 - Change order #1 (toilet relocation): $880 - Change order #2 (add outlet in island): $175 - Revised total: $29,055
This transparency prevents "I thought the total was $28,000" conversations.
Pricing Strategies for Change Orders
Time and Materials
Charge actual time at your hourly rate plus materials at cost (with markup).
Pros: Fair, easy to calculate Cons: Customer doesn't know the total upfront
Best for: Small changes, unpredictable scope
Fixed Price
Quote a firm price for the change, just like you would for a new job.
Pros: Customer knows the cost upfront, no surprises Cons: Risk of underestimating
Best for: Well-defined changes, larger additions
Minimum Charge
Set a minimum change order fee (e.g., $150). Even a "small" change has administrative cost — writing it up, getting approval, adjusting the schedule.
This discourages trivial changes that interrupt your workflow. "Can you move this switch 3 inches to the left?" hits different when there's a $150 minimum.
Contract Language That Protects You
Your original contract should include a change order clause. Here's what to include:
"Any changes to the scope of work described in this contract require a written Change Order signed by both Owner and Contractor. Change Orders will describe the modification, the cost impact, and the schedule impact. No changed work will be performed until the Change Order is approved in writing. Verbal requests for changes are not binding on either party. All Change Orders are subject to a minimum fee of $150."
This clause does two things: 1. Establishes that changes require written documentation 2. Sets the expectation that changes cost money
Customers who sign a contract with this clause can't later claim they didn't know changes would be extra.
When Customers Refuse to Pay for Changes
"I thought that was included."
Point to the original scope of work. "The scope specifies [X]. The change you requested is [Y], which is outside the original scope. Here's the change order you approved on [date]."
If you have written approval, this conversation is short. If you don't, you're negotiating.
"That's too expensive for a small change."
"I understand it feels like a small change visually, but moving plumbing requires demolishing the existing rough-in, running new drain lines, and passing a new inspection. The $880 covers 6 hours of skilled labor plus materials. I'm happy to walk you through the breakdown."
Itemized pricing defuses "too expensive" objections because the customer can see where the money goes.
"My last contractor never charged for changes."
"Your last contractor was probably losing money on those changes. We price every job accurately and transparently. That's how we deliver quality work and stay in business to warranty it."
Tracking Change Orders Across a Project
On a kitchen remodel, you might have 3-8 change orders. Track them in one place:
- Change order number (CO-1, CO-2, etc.)
- Date requested
- Description
- Cost
- Schedule impact
- Approval status
- Invoiced (yes/no)
At project end, you should be able to produce a clean summary: - Original contract: $42,000 - CO-1: Upgraded countertop material: +$2,400 - CO-2: Added island outlet: +$175 - CO-3: Relocated dishwasher: +$450 - CO-4: Deleted backsplash (customer will DIY): -$1,800 - Revised contract: $43,225
This summary goes on the final invoice. No surprises.
The Contractor's Dilemma: Saying No
Sometimes the right answer to a change request is "no" — or at least "not now."
Say no when: - The change would compromise code compliance - The change would delay the project past a hard deadline - The customer wants the change but won't pay for it - The change is technically impractical at this stage
Say "not now" when: - The change would be cheaper and easier as a separate project after the remodel - You don't have the right materials on-site - The change requires a specialist you haven't scheduled
"We can absolutely do that, but it would be more cost-effective as a separate project after the kitchen is complete. Want me to quote it separately?"
This keeps the current project on track while capturing the future work.
Change Orders Are Profit Centers
Here's the mindset shift: change orders aren't interruptions — they're revenue. Every change order is additional billable work that the customer is requesting.
Contractors who handle change orders professionally typically see 10-20% of their project revenue come from change orders. On a $40,000 kitchen remodel, that's $4,000-$8,000 in additional revenue — money that many contractors leave on the table because they're too uncomfortable to ask for it.
Document it. Price it. Get approval. Invoice it.
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