How Much Does a Contractor Cost: 7 Factors to Help You Calculate the Average Cost of a General Contractor

Whenever you have a building or renovation project, it can be helpful to hire a general contractor. Doing so allows you to have a single point of contact for all your questions and concerns. It also gives you access to materials and laborers you may not otherwise have. As you budget for your project, you need to include contractor fees so you have a more accurate price for the total project. How much does a contractor cost? How much do general contractors charge per hour? The answer is different for everyone. Here are some things to consider as you try to decide which contractor to hire.


popuptee bannerType of Contract Will Determine How Much a Contractor Costs


There are three main types of contracts preferred by general contractors. It is important to know the benefits and drawbacks of each before deciding which one will work best for your situation. Look at the contract type when you’re wondering, “How much does a contractor cost?”


Time and Materials


If your main concern is how much do general contractors charge, then you may prefer a time and materials contract, as it pays the contractor based on the actual costs of materials, direct labor and equipment. This means if anything is added to the project, the cost goes up. There is usually an extra sum worked into the contract to pay for overhead costs and allow the contractor to make a profit.


Fixed Price


Contracts of this type limit the contractor to a certain dollar amount regardless of any extra time spent or resources needed. At the beginning of your project, you will know how much do general contractors charge. In some cases, bonuses can be awarded for exceeding expectations. For example, there might be an incentive to get a project completed ahead of schedule or for achieving superior results.


Cost Plus a Fee


Under cost plus a fee contracts, although there is an initial fixed dollar amount agreed upon for the project, adjustments can be made in the case of unforeseen costs. This can end up working in your favor, as it removes the temptation for the contractor to cut corners in order to keep profits up.


If you are wondering how much do general contractors charge per hour you can see from the above contract types that it is rare for this rate to be disclosed.


2. Project Cost Percentage


When answering the question, “How much does a contractor cost?” you need to know the actual fees that will be charged. How much do general contractors charge per hour? The answer is they usually charge fees within the range of 10% to 20% of the project cost rather than an hourly fee. Depending on the contractor and the project, that can translate into an average of $250 to $58,000. Usually, the larger or more involved the project, the higher the percentage a contractor will charge. The more liability a project involves, the more a contractor needs to charge to make a profit.


3. Type of Construction 


How much do general contractors charge? Most contractors charge different fees for remodels vs. new construction. If you’re trying to decide whether to build or remodel, remodeling is usually more expensive. Because the contractor has to work around the existing structure and any complications that might arise, remodeling can be more difficult and therefore cost more. In contrast, new construction can demand more of the following:


  • Insurance
  • Labor
  • Equipment
  • Permits


How much does a contractor cost? Look at the construction you want done. New construction usually requires extra administration to adequately manage the added insurance, subcontractors and building codes. This can sometimes translate into a higher contractor fee. However, if the new construction is for a smaller home, the contractor fees can be similar to those charged for a remodel project.


4. Size of Project


You can expect to pay much less for a contractor to remodel a bathroom than to renovate an entire house. This is due to the extra staff and materials a contractor will need to oversee for the larger project. The more involved a project is, the greater the cost of certain things:


  • Taxes
  • Office staff
  • Transportation of materials
  • Communication between subcontractors
  • Warranty


How much does a contractor cost? Most contractors charge more for projects with higher overhead so they can still make a decent profit.


5. Type of Project


Specialized projects can require a contractor with more experience and expertise. If you’re looking to add a bedroom onto your existing home, you may be able to hire a less expensive contractor than if you want to completely overhaul your kitchen. Projects involving intricate floorplans or necessitating special types of permits can be completed more efficiently if the contractor is more experienced. How much does a contractor cost? You might need to pay more in specialized situations, since better contractors can command higher fees.


6. Location


Contractor fees can also vary based on the location of the project. This is because overhead fees tend to vary from one area to another. Things like labor, transportation of materials and permits can cost significantly more in certain areas. For example, if your project is in a remote location, it can be more expensive to have the materials shipped to the construction site. If the project is in a very urban area, permits can be more difficult to obtain. These are things you need to consider both when budgeting for your project as well as when wondering, “How much does a contractor cost?”


7. Experience


In most cases, with experience comes expertise. A very experienced contractor will most often have higher fees but will produce better results. It can be important to make sure any claims a contractor makes about experience are true. You can do this by asking for credentials, certifications, reviews from previous customers or other legitimate forms of proof. Additionally, a contractor who can fit your project in right away is most likely not as in demand as one that doesn’t have an opening for the next few months.


How much does a contractor cost? More experienced contractors have been in business longer. This usually means they will have a bigger network of contacts. This lets them choose from a larger pool of laborers and helps them know which subcontractors do the best work.


Home Improvement Contractors You Can Trust


Hiring a general contractor shouldn’t be stressful, especially now that you have a better understanding of how much does a contactor cost. When you’re looking for a contractor for your next home improvement project, start by choosing from a pool of top-rated professionals in your area. has done the research on home improvement specialists in fields such as home remodeling, HVAC, roofing, plumbing and more to make your job easier and stress-free. Get a quote quickly from verified area experts, and get started on your project today.

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