General Contractor Fee Percentage: A Guide for Homeowners

General contractors bring dreams to reality by building new homes and remodeling existing ones. When hiring a contractor for home improvement projects, you need to consider their fee payout, contract type, and payment structures. In this blog, we will specifically explore the average general contractor fee percentage in the United States.

Who is a general contractor, and what do they do?

A general contractor is a real estate professional who manages construction projects from start to finish. They oversee all aspects including hiring subcontractors, obtaining building permits, managing project budgets, and ensuring project completion according to specifications and deadlines.

General contractors serve as the main point of contact between the client and subcontractors, ensuring effective communication and coordination.

Opting for a general contractor can result in time and cost savings throughout the project, making it a wise decision to hire a skilled professional.

When should you hire a general contractor?

Hiring a general contractor is a good idea for big construction or renovation jobs where different trades are involved. They manage everything, from coordinating workers to handling budgets and making sure the work meets quality standards and building codes.

If you’re short on time or expertise to oversee the project yourself, a good contractor can take care of scheduling, budgeting, and dealing with subcontractors.

They also handle legal matters and contracts, which can be a relief if you’re not familiar with these areas. Overall, having a general contractor ensures your project is well-managed, stays on track, and meets your expectations.

You might consider handling some aspects of your project yourself to save on contractor fees. However, for tasks such as roofing or demolition, it’s safer and more manageable to hire licensed professionals.

What are the different types of general contractor fee structures?

If you are hiring a general contractor, it’s important to inquire about the fees and any additional charges before signing a contract. Especially, for large projects where costs can accumulate quickly. Generally speaking, there are three types of fee models that most contractors use.

Percentage markup

Instead of charging by the hour or per job, many general contractors use a percentage markup to simplify billing. Typically, this fee on a per-project basis equals anywhere between 10 and 20% of the total construction costs. It helps contractors cover expenses and maintain their businesses while providing clients with a clearer estimate of material costs as well as labor costs.

Hourly rate

Some general contractors charge by the hour, with rates ranging from $50 to $150 or more, depending on the project and location. Hourly rates are less common but may be agreed upon for specific projects or tasks. Keep in mind that licensed general contractors who have good work experience seldom bill on an hourly basis, except in rare cases.

Daily rate

Some general contractors may charge a daily rate or fixed price for certain projects. However, this is a less common payment system than percentage markups. Daily rates typically range from $300 to $500, with variations based on project complexity and contractor expertise. Remember that it’s crucial to clarify the definition of a day and the estimated duration of the task beforehand when opting for a daily rate billing structure.

How much is the average general contractor fee percentage?

General contractors typically levy a fee ranging from 10% to 20% of the total project cost. This encompasses subcontractor labor, materials, the project’s overall expenses, and any overhead, profit margins, or markups.

For instance, if you are building a house, you can expect the contractor fees to typically range from $18,000 to $90,000.

For commercial projects, general contractor fees typically range from 20% to 25% of the overall construction expenditure. That’s because commercial buildings commonly entail larger HVAC, plumbing, and electrical systems, substantial construction equipment, and a greater quantity of materials and labor compared to residential projects.

What factors impact general contractor pricing?

General contractors’ rates are influenced by several key factors, including the scope of work, the cost of materials, the necessity of hiring subcontractors, and additional considerations such as licensing, insurance, and permits.

Scope of work

The type and scale of the project greatly influence contractor pricing. Whether it’s a small bathroom renovation, finishing a basement, roof repair, or a major structural addition such as adding a second story, contractors typically charge up to 20% of the total cost of the project. Larger and more complex projects demand more time, materials, and manpower, resulting in higher fees.

Project type

General contractors typically provide estimates for projects based on the entire job, which includes specific details such as materials and finishes. Many experts believe this method is the most fair for both contractors and clients because it ensures costs align with the actual work and outcomes. And, contractors are motivated to complete the job efficiently and effectively, while clients can avoid additional expenses due to delays.

Here’s an overview of average general contractor fees for some common home construction projects:

Home construction: $18,000–$90,000
Home remodel: $2,000–$15,000
Room addition: $2,300–$15,000
Bathroom remodel: $250–$3,000
Bathroom addition: $1,800–$10,000
Kitchen remodel: $1,500–$10,000
Basement remodel: $2,500–$10,000
Garage construction: $2,000–$6,000
Sunroom addition: $1,500–$16,000
New outbuilding: $500–$8,000
Drywall installation: $800–$6,000
Deck construction: $450–$2,000
Concrete patio: $120–$1,000
New driveway: $170–$1,400
Fence installation: $160–$800

Cost of materials

The nature of the project dictates the quantity and quality of materials required. From basic building supplies such as lumber and drywall to specialized plumbing fixtures or luxury finishes, material costs can escalate rapidly. Opting for premium or eco-friendly materials further increases expenses.

Hiring subcontractors

The need for additional skilled labor impacts pricing significantly. Subcontractors, who often charge $40 to $80 per hour or more depending on expertise and job requirements, are commonly enlisted for specialized tasks. General contractors maintain networks of subcontractors for such needs, which affects overall project expenses.

License and contractor insurance

Reputable contractors possess proper licensing and comprehensive insurance coverage, including general liability and workers’ compensation. Additional insurance types such as bonds or pollution insurance are also factors. While these protections safeguard both clients and contractors, they contribute to the overall cost of services.

Permits

Obtaining permits is a crucial aspect of many construction projects, particularly those involving plumbing or electrical work. Permit costs vary widely, ranging from nominal fees to substantial expenses exceeding $2,000, contingent upon project complexity and location. Contractors typically pass these permit fees directly to clients.

What does a general contractor markup entail?

Markup refers to the overhead and profit necessary for any business to sustain its staff operations. It represents the amount a business adds to its direct costs. For general contractors, the fee is established by applying a markup percentage to the total expense of the construction project.

This fee typically encompasses a markup on:

Material costs.

Retention releases related to subcontractor labor.

Any additional incidental costs that may arise.

The level of markup directly influences the profit margin. Therefore, a contractor ensures that it adequately covers the business’s operational costs and generates additional revenue.

At what point do you make payments to a general contractor?

Typically, most contractors request an initial deposit ranging from 10% to 25% of the total contract price upfront. The remainder is paid at designated intervals or upon reaching certain project milestones, such as completion of demolition, framing, or the initiation of drywall installation.

It’s worth noting that many states impose limitations on the lump sum a contractor can request from a homeowner. So, it’s advisable to consult local regulations before paying your contractor.

How is a general contractor fee percentage different from a construction management fee structure?

A general contractor and construction manager share similar objectives but have distinct roles and pricing models.

A general contractor calculates the project cost, oversees subcontractors, and manages daily activities at the construction site. Since contractors commit to completing the project within a fixed budget, they strive to lower expenses to boost their profits, fostering a competitive dynamic with the client.

In contrast, a construction manager typically charges 5% to 15% of the project cost and offers comparable supervision, often collaborating with architects during the design phase. The construction manager operates on a predetermined fee, separate from the project bid.

General contractor fee percentage: Last thoughts

Whether you’re constructing a new home or planning a renovation, understanding the expenses involved in hiring a contractor beforehand is beneficial. Their fees significantly influence the project’s overall cost. Being aware of the anticipated general contractor costs aids in budget preparation and safeguards against being exploited by an excessively greedy or unscrupulous contractor.

What is the general contractor fee percentage, on average? was last modified: October 7th, 2025 by Ramona Sinha

Written by Ramona Sinha. October 9, 2025

Ramona is the Senior Content Writer for Kukun. This experienced blogger uses simple and succinct words to decipher the complex phenomenon called life. She has written articles covering a broad range of topics, such as real estate, lending and mortgage, finance, business, taxation, home designs, home improvement projects, decor concepts, and more. An avid traveler, she’s a digital nomad at heart and an animal lover from the depth of her soul.