How Much Does a General Contractor Charge in Washington?

A general contractor usually charges a fee on top of the cost of the work. A national cost guide puts that fee at 10% to 20% of construction costs on large projects. Small jobs are more often priced at a fixed, daily or hourly rate. The same guide lists $50 to $150 per hour.

Washington then adds retail sales tax on the whole contract price, labor and materials. These are market numbers, not our price list. Culver Built is a registered Washington general contractor based in Langley on South Whidbey Island. We price each job from the real plans and the real site.

How is a general contractor’s fee figured?

Most general contractors get paid as a percentage of the total construction cost, the same guide says. That percentage includes a markup on labor, materials and supplies. The markup on single items runs from 8% to 45%. Built into the final bid, it comes to a total average markup of 10% to 20%.

Some contracts set the fee as a fixed dollar amount instead. You pay the cost of the work plus that set fee. On a new house, the guide puts contractor fees at $18,000 to $83,000 on average. That is 10% to 20% of the total construction budget.

The fee is a share of the project cost, so the project sets the dollar amount. For the work itself, see home remodel cost and what a home addition costs in Washington.

What are the three ways a general contractor prices a job?

There are three common ways to price a home job. Each one puts the risk of an overrun on a different side of the contract.

Fixed price. The contractor estimates the total cost and the scope up front and must stick to the budget. If one part of the job runs over, the contractor has to make up the shortfall. You know the number before work starts, so the plans need to be settled first.

Cost plus a fee. You pay the real cost of the work plus the contractor’s fee. The total moves with the costs, which leaves room for changes as the job goes. The guide warns that a cost-plus percentage favors the contractor over the homeowner. A bigger budget means a bigger fee, and a set fee or a cap on the total changes that.

Time and materials. You pay an hourly rate for labor plus the materials. The guide says this setup carries more risk for the homeowner. Set limits on the total time and cost up front. Contractors rarely bill by the hour except for planning before construction or for small projects.

What does a general contractor’s overhead and profit pay for?

The fee covers more than profit. The guide says it pays for staff, operations, marketing, general liability insurance, taxes and profit. On a home job, the fee pays for:

• Supervision. The general contractor is responsible for the daily oversight of the building site.
• Scheduling the trades. The general contractor books and manages the subcontractors, vendors and laborers. On an island job, that includes keeping materials arriving.
• Insurance and the bond. Washington sets a minimum for each one, covered below.
• The office. Estimating, ordering, billing and paperwork all take staff time.
• The risk on a fixed price. When a fixed-price job runs over, the contractor covers the overrun.
• Profit. It keeps the company in business for the next job and for callbacks after this one.

Do you pay sales tax on a general contractor’s bill in Washington?

Yes, when the job is on your own land. A prime contractor who builds or remodels on the owner’s land collects the tax from the landowner. It is figured on the gross contract price. The tax applies to the full contract price, labor and materials, with no deduction for costs. The contractor’s fee is part of that price.

The rate is the 6.5% state rate plus the local rate for the address. The local rate varies by city and county. Invoices must state the sales tax separately, so it shows up on its own line. Ask how each quote shows the tax before you compare totals.

What must a registered general contractor carry in Washington?

Washington requires all construction contractors to register with L and I and to be bonded and insured. Under state law, a general contractor’s work requires more than one building trade or craft on a single job. The bond and the insurance are part of a contractor’s overhead.

• Bond: a $30,000 surety bond for a general contractor, or $15,000 for a specialty contractor.
• Insurance: general liability of $200,000 public liability and $50,000 property damage, or a $250,000 combined single limit.

The higher bond amounts apply to registrations expiring July 1, 2024 or later. L and I’s contractor verification tool shows whether a registration is active and the contractor is bonded and insured. L and I also suggests asking for a performance bond on larger projects.

What paperwork protects your money on a Washington job?

L and I tells homeowners to get a written contract and understand its terms. On a residential job of $1,000 or more, the contractor must give you a disclosure before work starts. It is called the Notice to Customer.

The notice warns that your property may be liened. An unpaid supplier, worker or subcontractor can file a lien, and you could pay twice for the same work. You may ask the contractor for original lien release documents from each supplier and subcontractor.

The notice also says you may hold back a percentage of the contract as retainage. The contract sets that percentage. Ask how much is held back and when it gets paid.

Ready to talk to a general contractor on Whidbey Island?

The figures above are market numbers, not our price list. Your number depends on the plans, the site and the pricing setup in the contract. We price a job with a detailed estimating study. It starts with a full materials list priced with local vendors, then labor and work orders. You see a clear bottom line before work starts.

We are licensed, bonded and insured, and we give free estimates. Call or text (360) 544-9027, or see how we work as your general contractor. If you want design and construction under one contract, see design-build.