Also called: unit pricing, unit rate.
A roofing bid might carry a lump sum for the known work plus a unit price of $85 per sheet for deck replacement, applied to however many sheets turn out to be rotten. The quantity is unknown; the rate is not.
Unit prices are the correct answer to a known unknown. They convert the most common source of change orders into a number you negotiated while other contractors were still bidding.
They also make bids more comparable: two contractors' unit rates for the same operation can be compared directly, even where the totals cannot.
Why it matters
Agreeing unit prices before the contract is signed removes the leverage problem. The same deck repair costs one number when three contractors are competing and another when the roof is already open.
Related terms
- Allowance — An allowance is a placeholder amount included in a bid for work or materials that have not been specified yet — a budget line to be reconciled against the actual cost once the choice is made.
- Change order — A change order is a written amendment to a signed contract that adds, removes or alters work, and adjusts the price and schedule accordingly. It is the mechanism by which a job's final cost stops matching the bid you accepted.
- Lump-sum bid — A lump-sum bid is a single fixed price for the entire defined scope, regardless of what the work actually costs the contractor to perform. The contractor carries the risk of their own estimate being wrong.
- Exclusion — An exclusion is work a contractor has explicitly stated their price does not cover. Exclusions are a legitimate and normal part of a bid — the danger is not that they exist, but that they are easy to miss.
Quotrium drafts the scope, sends it to the contractors you pick, and scores every bid against it line by line. See how it works.