Unit-Price
Unit-price contract definition. Learn how to bill based on estimated quantities and fixed per-unit rates like cubic yards or square feet.
Calculation Formula
Total Price = Σ (Actual Quantity × Unit Rate) Real Contractor Example
An excavation sub bills $15 per cubic yard of dirt moved. The total invoice depends on the final volume verified in the field.
How Unit-Price Pricing Works
In a unit-price contract, the price is set per unit of work, such as per cubic yard, square foot or linear foot, with an estimated quantity. The final payment is the actual, verified quantity multiplied by the unit rate.
It suits work where the quantity cannot be known in advance, such as excavation, concrete or paving. At $15 per cubic yard, moving 1,000 cubic yards bills $15,000, while moving 1,400 bills $21,000.
Protecting Yourself on Unit-Price Jobs
State how quantities are measured and who verifies them. Include the estimated quantity and what happens to the rate if the actual quantity differs significantly. Price mobilization separately so a low quantity does not wipe out your margin, and keep field tickets as proof of what was moved or installed.
Frequently Asked Questions
What is the difference between a unit-price and a lump-sum contract?
A lump-sum contract has one fixed price for a defined scope. A unit-price contract has fixed rates, and the total changes with the quantity actually performed.
Who carries the quantity risk?
Mostly the owner, because the total moves with the quantity. The contractor carries the risk that the unit rate does not cover their real cost and productivity.
Can the unit rate change during the job?
Only if the contract allows it. Many contracts include a clause that adjusts the rate when the actual quantity varies from the estimate by more than an agreed percentage.
Related terms
Put This Into Practice
Knowing the definition is step one. RemodelFin tracks this in real time on every job — no spreadsheets.