How to Price Variation Orders in Construction

6 min read · Published by Lintel

Undercharging on variation orders is one of the most common ways fit-out contractors lose margin. Not because they don't know their costs — but because they're pricing under pressure, on site, without the time or tools to do it properly.

A client asks for something extra at 9am. They want to know the cost by lunch. The site manager pulls a number from memory, rounds it down to keep the client happy, and sends it over. The variation gets approved — at a price that doesn't cover the actual cost of the work.

This guide covers how to price variation orders accurately, every time, regardless of the pressure you're under on site.

Start with a rate card

A rate card is a schedule of your standard costs — labour by trade, materials by type, plant and equipment day rates, and your standard prelims. It's the foundation of consistent, accurate VO pricing.

Without a rate card, every VO is priced from memory. Memory is inconsistent, biased downward under pressure, and impossible to audit after the fact. A rate card removes the guesswork.

Your rate card should include:

Labour rates by trade — carpenter, stud partitioner, ceiling fixer, first fix electrician, second fix electrician, decorator, general operative, site foreman. Both day rates and hourly rates where applicable.

Materials prices — grouped by trade category. Stud partition system per m², grid ceiling per m², raised access floor panel per m², double socket outlet per item. Standard materials you use on every project.

Plant and equipment — scissor lift, cherry picker, dust extraction, generator. Day rates for hired plant that might be needed for a variation.

Prelims — site manager day rate, welfare costs, protection materials, skip hire. Preliminary costs that apply to the variation work.

Subcontractor rates — day rates for trades you regularly subcontract. M&E, specialist joinery, data cabling.

Review your rate card at least annually, and update it whenever your costs change. A rate card based on last year's prices will systematically underprice your work.

Build up from first principles

Price every variation from the bottom up — labour, then materials, then plant, then prelims. Don't estimate a lump sum and work backwards.

Labour — how many operatives, which trades, how many days or hours? Use your rate card day rates. Be realistic about duration — a job that takes 1.5 days should be priced as 1.5 days, not rounded down to 1.

Materials — list every material needed. Use your rate card unit prices. Include wastage — typically 10–15% on cut materials like partition board, ceiling tiles, and flooring panels.

Plant — does this variation require any hired plant? If you need a scissor lift for a day to install ceiling fixtures, include it. It's a legitimate cost.

Prelims — does the variation require additional site management time, welfare, or protection? If so, include it.

Apply your markup

Markup is applied to your total cost to produce the sell price — what you charge the client. Margin is the difference between sell price and cost, expressed as a percentage of the sell price.

These are not the same thing. A 20% markup on a £1,000 cost produces a sell price of £1,200 and a margin of 16.7%. Confusing markup and margin is a common and expensive mistake.

Your standard markup should reflect:

Your overhead recovery — the fixed costs of running your business that aren't captured in your direct rates. Office, vehicles, insurance, management time.

Your profit target — what you actually want to make. Most fit-out contractors target 15–25% margin on variation work.

The risk premium — variations carry more risk than contract work. Unforeseen conditions, tight programmes, difficult access. Price accordingly.

Set a minimum acceptable margin — typically 15% — and flag any variation priced below it before it goes to the client. A variation priced at 8% margin is barely worth doing.

Round up, not down

When you've calculated your sell price, round up to the nearest sensible figure — £10 or £50 depending on the value of the VO. Never round down.

A sell price of £1,432 becomes £1,440 or £1,450. The client won't notice the difference. You will, across 30 variations on a project.

Price for the disruption, not just the work

Variation work on a live fit-out project is almost always more disruptive than the same work in a clean programme. Access is harder, other trades are in the way, the client wants it done yesterday.

This disruption has a cost. If a partition wall takes one day in a clear building but 1.5 days on a live site with restricted access, price 1.5 days. The disruption is a legitimate cost of the variation, not your problem to absorb.

Get the price approved before starting

The most accurately priced variation in the world is worthless if the client hasn't approved it. Price it, send it, wait for written approval before starting the work.

If the client pushes back on the price, negotiate — but don't just cave. Understand what they're disputing. If they think the labour cost is too high, explain your day rates. If they think the duration is too long, explain why. A price that's been built up from a rate card is defensible in a way that a gut-feel number isn't.

How Lintel helps

Lintel auto-prices variation orders from your rate card the moment you raise them on site. Add your line items, set your markup percentage, and Lintel calculates the sell price — including a live margin display so you can see exactly what you're making before you send it to the client.

If the margin drops below your minimum threshold, Lintel flags it in red before you send. No more undercharging under pressure.

Once your VO is priced, the next step is getting it approved. See our guide on how to manage variation orders on fit-out projects.