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Updated over 7 years ago on . Most recent reply

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Balazs Sipocz
  • Tarzana, CA
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"Contractor's fee" percentage in a fixed price remodel contract?

Balazs Sipocz
  • Tarzana, CA
Posted

Hello, 

Is it normal to have a "contractor's fee" defined in % for a fixed-priced house remodel contract?

Additional Background

Contractor says there is a lot of "unknowns" in the project. When asked what happens if some parts of the work come it at a lower cost, he said that would be his profit and if it's higher, it would be his risk.

However, there is still a % at the estimate, labeled as "Contractor's Fee".

This is my first major remodel project with a GC, so I don't know what is standard. Is it normal to have a % markup as part of the fixed price contract?

Or is this some kind of trick because I don't know how it works?

There are in fact a lot of unknowns with the project, I just don't understand that if the items are already padded for his profit, why is there a % as well?

Is this common? Should I find someone else?

Most Popular Reply

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Manolo D.#3 Contractors Contributor
  • Contractor
  • Los Angeles, CA
1,249
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Manolo D.#3 Contractors Contributor
  • Contractor
  • Los Angeles, CA
Replied

Balazs Sipocz What kind of unknowns? Usually, a lot of unknowns come from two things, inexperienced contractor or inexperienced client, or WORSE both are inexperienced! Do a detailed scope, firm fixed price / lumpsum. Stipulate the change order percentage, with receipts and payroll hours, etc. Done.

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