By LE Construction · Published October 6, 2026
People often ask what a general contractor charges as if it were a single fee. It is not. A general contractor’s price is the cost of the work, the cost of running the job and running the business, and a profit, built into one number. Here is how that number comes together and how to compare bids.
How a contractor builds a price
Direct costs
- Labor for the contractor’s own crew.
- Subcontractors for specialty trades.
- Materials, from lumber to fixtures.
- Permits and fees.
- Equipment and disposal, like dumpsters and haul-off.
Overhead
The costs of running jobs and the business: supervision, insurance, workers’ compensation, licensing, vehicles, office, estimating time and warranty work. A licensed, insured contractor carries real overhead that unlicensed operators avoid.
Profit
What keeps the business going and able to come back next year to fix something under warranty.
Most contractors build overhead and profit into their line items rather than adding a separate visible markup. Either way, it is part of what you pay.
What you get for it
- One point of responsibility for the whole job.
- Scheduling and coordination of trades and inspections.
- Permits pulled under the contractor’s license.
- Insurance and workers’ compensation.
- A warranty. Ours: any issue reported within 30 days of completion is corrected at no charge.
Why bids differ
Two bids for “a kitchen remodel” can describe very different jobs. Common differences:
- Allowances for cabinets, tile and fixtures.
- Whether demolition, haul-off and permits are included.
- Whether conditions like an undersized panel or rot are priced in.
- Finish level and installation detail.
How to compare fairly
- Give every contractor the same written scope.
- Ask for line-item estimates.
- Compare what is included, not just the total.
- Check licenses and insurance on the CSLB website.
- Ask how hidden conditions and changes are handled.
See questions to ask a contractor and how we run a project.
Frequently asked questions
Is it cheaper to hire the trades myself instead of a general contractor?
It can look cheaper on paper, but you take on scheduling, coordination, permits, responsibility for the work and the risk of gaps between trades. In California, pulling permits as an owner-builder also makes you responsible for the work and for any employer obligations.
Why do general contractor bids vary so much?
Mostly because they are not pricing the same scope. Bids differ in allowances, demolition, repairs, permits and finish level. Compare line items, not totals.
Do contractors charge for estimates?
Many, including us, give free estimates. Some charge for detailed design work or plans. Ask up front.
How should a general contractor be paid?
California limits the down payment on a home improvement contract to $1,000 or 10% of the price, whichever is less, and later payments should match completed work. A milestone schedule protects you.