General Contractor Cost: Fees, Percentages, and What You Pay

General contractors charge 10 to 20 percent of the total project cost as their fee in most residential remodeling markets, according to HomeGuide cost data. Hourly rates for GC work range from $50 to $150 per hour where hourly billing applies. On a $60,000 kitchen remodel, a 15 percent GC fee adds $9,000 to the project cost. Understanding how that fee is structured, what it includes, and what is legitimately negotiable gives you the information to evaluate GC proposals with the same confidence you would bring to any other contractor quote.

How General Contractors Charge: Percentage vs Hourly vs Fixed Fee

General contractors use three primary billing structures for residential projects:

Percentage of total project cost. The most common structure for full remodels, additions, and projects involving multiple trades. The GC adds their fee percentage on top of the sum of all subcontractor costs, materials, and permits. A 15 percent fee on $80,000 in total project costs equals a $12,000 GC fee.

Hourly rate. More common for consulting, project assessment, or jobs where scope is undefined. GC hourly rates run $50 to $150 per hour depending on market and experience. Hourly billing is uncommon for defined-scope residential projects because it shifts cost risk to the homeowner.

Fixed fee (lump sum). The GC quotes a single all-in price covering all subcontractors, materials, permits, and their own overhead and profit. The homeowner pays one number regardless of what the GC actually spends managing the project. Fixed-price contracts are the most homeowner-favorable structure when scope is well-defined.

Average General Contractor Fee as a Percentage of Project Cost

HomeGuide and Angi cost data indicate the following typical GC fee ranges by project type:

Fee ranges from HomeGuide cost data and contractor pricing surveys. Total cost example uses midpoint of project range.

Larger projects often command a lower percentage because the GC's fixed overhead costs are spread over a larger base. A 10 percent fee on a $200,000 project represents more absolute dollars than a 20 percent fee on a $30,000 project. For very large projects, GCs sometimes negotiate a sliding scale that decreases the percentage as the project size grows.

What Does the GC Fee Include?

The GC fee covers a set of real services that have value regardless of whether you choose to pay for them explicitly or absorb the cost yourself:

Project management. The GC coordinates all subcontractor scheduling, manages material deliveries, and troubleshoots delays and conflicts. On a multi-trade project, this alone can consume 30 to 50 hours of time.

Permitting. The GC typically pulls all required permits, submits plans for review, schedules inspections, and is the responsible party with the building department if inspection issues arise.

Subcontractor vetting and management. The GC is contractually responsible for the quality of subcontractor work. If a plumber does a poor job, the homeowner's legal claim runs to the GC, not the subcontractor directly.

Site supervision. A GC or their foreman is on site daily to verify work quality and sequence. This is the primary quality control mechanism on a complex project.

Insurance. The GC carries general liability insurance that covers damage caused by any subcontractor on the job. Without a GC, the homeowner must verify each individual subcontractor's insurance separately.

What Is Not Included in the GC Fee

Understanding what falls outside the GC fee is equally important for budgeting:

Design and architecture fees. If the project requires architectural drawings, structural engineering, or interior design services, those are separate professional fees -- typically 8 to 15 percent of project cost for design, and $150 to $300 per hour for structural engineering consultation.

Permit fees. The GC manages the permitting process, but the permit fees charged by the building department are passed through to the homeowner at cost. These vary widely by municipality and project scope -- $200 to $2,000 or more for major residential work.

Material allowances above the quoted specification. If you choose flooring, fixtures, or finishes that cost more than the line-item allowances in the contract, you pay the overage.

Change orders. Any scope change after the contract is signed -- whether initiated by you or by hidden conditions discovered during work -- is a change order with its own cost. Most GC contracts specify that change orders carry the same overhead and profit percentage as the base contract.

How to Compare GC Bids Side by Side

A useful framework for bid comparison is to ask each GC to break their proposal into three components:

1. Subcontractor and material costs (the direct costs they are passing through)
2. Markup on those direct costs (how much they are adding above what they pay)
3. GC fee or overhead and profit (their project management margin)

Not all GCs will provide this level of transparency, but asking the question tells you something. A GC who can explain how their fee is structured is operating with more financial discipline than one who presents a single opaque number.

Compare the total project cost across bids, not just the GC fee percentage. A GC with a 12 percent fee but who has padded subcontractor costs may deliver a higher total than a GC with a 15 percent fee and competitive subcontractor pricing.

When Is a GC Fee Too High?

A GC fee above 20 percent warrants scrutiny. Ask the GC to justify the premium -- more intensive site supervision, specialized crew, project complexity, or a particularly tight schedule all represent legitimate reasons for a higher fee. If the justification is unconvincing, get additional bids.

A GC fee that is suspiciously low (under 8 percent) on a complex multi-trade project is an equally important signal. GCs sometimes underbid to win a project and recoup margin through aggressive change order pricing. Per HomeGuide industry analysis, change orders on cost-plus or poorly specified projects can add 10 to 25 percent above the original bid price.

The protection against this pattern is a well-specified scope document and a contract that requires a written, signed change order before any out-of-scope work proceeds. For a full discussion of how to read a GC contract, see How to Read a Contractor Contract.

Negotiating with a General Contractor: What Is Possible

GC fees are negotiable within limits. What generally IS negotiable:

• The fee percentage, particularly on larger projects or in markets with multiple qualified GCs bidding the same job
• Payment schedule timing (less money earlier, more at milestones)
• Inclusion of a not-to-exceed cap on change orders
• Allowance line items if you want to select your own finishes

What generally is NOT negotiable:

• Insurance and bonding requirements (a GC cannot eliminate overhead they actually carry)
• Permit fee pass-throughs (these are municipal charges set by the jurisdiction)
• The legal liability structure (a GC who accepts responsibility for subcontractor work cannot simply waive that obligation)

For a full discussion of what a GC does and how the subcontractor relationship works, see General Contractor vs Subcontractor: Who Does What. For guidance on the hiring process itself, including license verification and the right questions to ask before signing, see How to Hire a General Contractor.

For a broader explanation of how contractor markup works across different billing structures, including the materials markup that subcontractors and GCs apply, see Average Contractor Markup: What You Are Actually Paying For.