Unit price contract

Unit pricing works where the type of work is known but the amount isn’t, such as excavation, paving, concrete flatwork, utility lines or repetitive installations. The owner provides estimated quantities, contractors bid a price per unit, and payment follows the quantities measured as the work is done.

Each unit price has to cover everything that goes into one unit: labor, materials, equipment, overhead and profit. If fixed costs such as mobilization are spread across the units, a quantity that comes in short can leave them unrecovered. That’s why many contracts allow price adjustments when quantities change a lot, or list mobilization separately.

Agree before work starts on how units will be measured and who verifies them, and keep your own records.

Residential contractors use unit prices too, often informally: price per square foot of tile, per linear foot of fence, per square of roofing. Knowing your true cost per unit is the fastest way to estimate repeat work accurately.