The Comprehensive Guide to Understanding General Contractor Costs

A construction project, whether it’s a simple home renovation or a complex commercial build, requires a team of skilled professionals to execute it successfully. Among the most critical figures in these projects is the general contractor. General contractors manage all aspects of a project, from acquiring building permits to hiring subcontractors to dealing with inspections and more. However, one of the most common questions surrounding general contractors is: “how much do they charge?” This article delves into the intricate world of general contractor costs to provide you with a clear understanding of what to expect when hiring one.

What is a General Contractor?

Before we dive into the costs, it’s essential to have a solid understanding of what a general contractor does. A general contractor, also known as a prime or main contractor, is responsible for the day-to-day oversight of a construction site, management of vendors and trades, and the communication of information to involved parties throughout the course of a building project. They are essentially the glue that holds a project together, ensuring everything runs smoothly and according to plan.

Factors Influencing General Contractor Costs

Scope of the Project

The scope of the project is one of the most significant factors that influence the cost of hiring a general contractor. Projects can range from small, such as minor home improvements, to large-scale commercial builds or home renovations. Naturally, the larger and more complex the project, the more a general contractor will charge for their services. This is due to the amount of time, labor, and resources required to complete larger projects.

Material Costs

Material costs also play a crucial role in determining the overall contractor charges. If your project requires high-end, luxurious materials or specialized equipment, this will be reflected in the cost. However, this doesn’t necessarily mean that choosing cheaper materials will significantly decrease the overall cost. Quality materials can be seen as an investment, potentially saving you from future repairs or replacements.


Labor costs can be one of the most challenging aspects to pin down when considering contractor costs. This is because labor costs can vary greatly depending on the region, the complexity of the work, and the expertise required. For instance, specialized labor, such as electricians or plumbers, will typically cost more than general labor.

How General Contractors Charge

Cost Plus Contract

In a cost-plus contract, the client agrees to cover the actual expenses of the project. These expenses include the cost of labor, materials, and other direct expenses related to the project. In addition, the contractor includes a percentage to cover their overhead and profit margin. This contract is often beneficial for projects where the scope isn’t clear, as it allows flexibility for unexpected costs.

Fixed Price Contract

In a fixed price contract, the contractor assesses the scope of the work and provides a single price for the entire project. This type of contract is typically used for projects with a well-defined scope. The client knows exactly what they’ll pay upfront, allowing for easier budgeting. However, any changes or unexpected issues that arise will typically result in additional costs.

Time and Materials Contract

With a time and materials contract, the client agrees to pay the contractor based on the time spent by the contractor’s employees and subcontractors to complete the work, and for materials used in the construction. This type of contract is typically used when it is not possible to estimate the size of the project, or when it is expected that the project requirements would most likely change.

Understanding the Average Costs of Hiring a General Contractor

To give you a rough estimate, general contractors typically charge between 10% and 20% of the total cost of the project, including the cost of materials, labor, and permits. However, these percentages can vary widely based on the factors mentioned earlier. For small projects, you may find contractors who charge a flat fee. It’s crucial to get multiple quotes and ensure the quote includes all the services you need.

Conclusion: Getting the Most from Your Investment

The cost of hiring a general contractor can vary greatly, so it’s important to do your research and understand the factors that can affect these costs. While the initial cost might seem high, hiring a professional can save you time, effort, and even money in the long run by ensuring the job is done right the first time.

Remember, the cheapest option isn’t always the best. Take the time to get to know your potential contractor, review their previous work, and check references. A well-executed project, led by an experienced and professional contractor, is an investment that can add significant value to your home or commercial property.

In the world of construction, the old adage is often true: you get what you pay for. By investing in a reputable general contractor, you are investing in the quality, durability, and overall success of your project.