How to price a variation before you say yes

Price it from cost and margin

Work out your real cost first: labour hours, materials and any subcontractor. Then choose the margin you want on the price, not a markup on cost. The formula is:

• Price = cost ÷ (1 − margin).
• GST = price × 10%.

Example: the extra costs you A$1,000 and you want a 20% margin. The price is A$1,250, plus A$125 GST, so A$1,375 to the client. If you added a 20% markup instead, the price would be A$1,200 and your margin only 16.7%. Our guide to builder profit margins explains the difference.

Count the time too

Ask how many working days the extra adds. A delay costs you site time and holds up the next stage claim, so say it in the price message.

What the state rules ask for

For domestic building contracts, the states set out how variations must be documented. The points below summarise the sources we read. They are not a substitute for your contract or legal advice.

New South Wales

A variation must be in writing, attached to the contract and signed by the owner and the builder. The document needs to explain the effect on cost and time, including the calculation (NSW Government).

Victoria

For a major domestic building contract, a builder-initiated variation needs a notice describing the change, the reason, the effect on the work and any delay, and the cost and effect on the price. You cannot do the work without the owner's signed consent. For a variation the owner asks for, the Act lets you proceed without a notice only if you reasonably believe it needs no permit change, causes no delay and adds no more than 2% of the original price. If you do not follow the process you may not be able to recover the money, except where VCAT allows it. We read the Act as in force from 1 July 2026. A reform passed in September 2025 may change this when it starts, so check the current rules with Consumer Affairs Victoria (Domestic Building Contracts Act, sections 37 and 38).

Queensland

Give the owner a written copy of the variation before the earlier of 5 business days after you agree it and the start of the work, and do not start without the owner's written agreement. The document must be legible and describe the change, the date of the request, the estimated delay, the change in price or how it is calculated, and when it is payable. You cannot demand the extra before starting the variation work. A request for more time must go in writing within 10 business days of knowing about the delay (QBCC Act, Schedule 1B, sections 40 to 42; QBCC guidance).

A message you can send

This plain wording covers price, GST and time, and asks for a reply before you start. Check it against your contract.

Variation: Extra waterproofing to bathroom 2
Price: A$1,250.00 + GST A$125.00 = A$1,375.00
This will extend the program by 1 working day.
Please reply "approved" before we proceed. Work on this item will not start until we hear from you.

If the client pushes back

Send the price with the cost, margin and days laid out, so the conversation is about scope and not about you. Offer a cheaper option if there is one, such as a different material or a later stage. If they say no, you have lost nothing and you have a record of what was asked. Check your contract for who can approve a variation, because it is not always the person standing on site. Keep every approval with the job, because you will need it if the price is disputed later.

Mistakes that cost money

• Quoting from memory instead of your cost for labour, materials and subs.
• Using markup when you meant margin.
• Starting before you have a written yes, which in some states can put payment at risk.
• Leaving out the extra days and the knock-on delay to the next claim.

Friday Profit Check works this out in under two minutes and gives you the message ready to copy: try the demo, and see how a variation changes your cash in the cash flow guide. It costs A$149 once; details on the pricing page.

Sources

• NSW Government, building contracts guidance, updated 29 April 2026.
• Domestic Building Contracts Act 1995 (Vic), version in force from 1 July 2026, sections 37 and 38.
• QBCC Act 1991 (Qld), Schedule 1B, current as at 1 February 2026, and QBCC guidance on contract changes.