Guide
Change order best practices for contractors
The average contractor doing $1M per year absorbs $40,000–$80,000 in unpaid change order work. Not because clients refuse to pay — because the work was never formally documented and priced before it started.
Why change orders go unpaid
The most common reasons:
- —The scope change was verbal and never written down
- —The contractor assumed the client understood it would cost extra
- —The change order was sent after the work was already done
- —No approval was obtained before proceeding
- —The price was not agreed upon before the work started
- —The contractor was worried about damaging the relationship
The change order rule
No work outside original scope starts until a written change order is approved and signed.
This is not an aggressive policy. It is a basic business boundary. Clients who understand what they are buying do not object to it. Clients who object to it are clients who intended to get free work.
What every change order must include
How to price a change order
Price change orders using the same method as original scope — not a quick guess.
CO Total = (Labor + Materials + Subs) ÷ (1 − Target Margin)
Do not use a lower margin on change orders — use the same or higher.
Change orders often have disproportionate overhead costs relative to their scope — mobilization, material runs, schedule disruption. Price them accordingly.
A minimum change order fee ($150–300) for small scope changes covers your administrative cost and signals that changes have a real cost.
The change order conversation
When a scope change comes up, the conversation goes like this:
Client: "While you're here, can you also..."
You: "That's outside the original scope. I can do it — let me price it out and get you a change order to approve before we start. It'll take me 10 minutes."
Not aggressive. Not awkward. Professional. Most clients respect a contractor who manages scope systematically — it signals that the rest of the job will be managed the same way.
When clients push back on change orders
Two responses depending on situation:
If they claim it was in the original scope:
Pull the original contract and scope of work. If it is not there in writing, it was not in scope. This is why written contracts with specific scope are non-negotiable.
If they refuse to pay:
Stop the work. Do not proceed on unapproved scope. A stopped job is recoverable. Completed unapproved work with a dispute is not.
Generate formatted change orders in seconds
Change Command calculates the correct price with your markup applied and formats the change order for client approval.
Open Change Command →Related