How to Stop Losing Money on Change Orders
The client asks for "one small change," you say sure, and three of those later you've done a day of unpaid work and can't prove any of it was agreed. Change orders are where good jobs lose their margin — not because the work is hard, but because nobody wrote it down.
The extra work is real work. Treat it that way
A change to the scope is labor, material and time, the same as anything else on the job. Doing it on a handshake is a gift you didn't mean to give. Every change needs a number and an approval before the work happens, not after.
Get it in writing, before you do it
A change order is a short record: what changed, why, the added cost, any impact on the schedule, and the client's approval. Verbal yeses evaporate when the final invoice lands and the client only remembers the original number. Written, dated and approved — or, for billing purposes, it didn't happen.
Don't bet the job on change orders you won't chase
There's a well-worn trap in construction: bid the base job tight, then count on change orders to make it profitable. It only works if you actually price, approve and bill every change. If change orders are where your profit lives, they can't be the part of the job you handle casually.
Track every one against the job
Keep a running log for each job — every change, its amount, approved yes or no, billed yes or no. Nothing slips through, and at the end the job's true price is the original contract plus every approved change, not the number you started the week with.
Skip the maths on the next one
Track every change order against what it actually cost, find which kind keeps losing money, and stop pricing extras at a discount.
See the Change Order Tracker · $39Common questions
- What should a change order include?
- What changed, the reason, the added cost, any effect on the schedule, and the client's written, dated approval.
- Should I do the extra work before it's approved?
- No. Price it and get it approved in writing first. Work done on a verbal okay is the hardest of all to get paid for.
- Why do contractors lose money on change orders?
- Three reasons, usually: they do the extra work on a verbal yes, they don't price it properly, or they forget to bill it. Logging every change against the job fixes all three.