Most remodels do not go over budget because of bad luck. They go over because of three specific, predictable mechanisms — and each one can be controlled before a contract is signed.
Last updated August 13, 2026. Figures reflect real project pricing across Sonoma, Napa, Marin and Solano counties and are reviewed each season.
An allowance is a placeholder amount for something not yet selected — tile, fixtures, appliances, lighting. If your contract carries a $6,000 tile allowance and you select $14,000 of tile, you owe the difference. Nothing went wrong; the number was simply a guess made before you had chosen.
This is the single most common way an accurate estimate becomes an inaccurate final invoice. Ask for allowances to be itemized with a unit cost, not just a lump sum, and ask directly whether they reflect the level of finish you have been discussing.
Nobody can price what they cannot see. In wine country homes we routinely open walls and find dry rot from a decades-old leak, knob-and-tube or aluminum wiring, undersized framing, failed subfloor, or plumbing that was never permitted. These are real costs that no estimate could have anticipated.
Moving a wall is inexpensive on a drawing, moderately expensive before framing, and very expensive after the drywall and electrical are in. The same decision costs radically different amounts depending on when you make it.
The pattern behind all three: cost rises sharply the later a decision is made. Every hour spent deciding before construction saves several times its equivalent during construction.
| Project type | Contingency |
|---|---|
| New construction on a clear lot | 10–15% |
| Remodel, home under 20 years old | 10–15% |
| Remodel, home 20–50 years old | 15–20% |
| Remodel, home over 50 years old | 20–25% |
| Hillside or unimproved parcel | 20%+ |
Contingency is not optional money and it is not a wish list fund. Treat it as unavailable until the project is closed out. Homeowners who mentally spend their contingency on an upgraded range in week two are the ones who end up in a difficult conversation in week nine.
For a $150,000 total available:
That $108,000 — not $150,000 — is the number you design to. Designing to the full amount is how projects begin over budget before anything is built.
Three bids at $82,000, $96,000 and $131,000 for the same project do not mean one contractor is greedy and another is efficient. They almost always mean the three are pricing different scopes.
A contractor who wins on price and has no margin has only two ways to recover it: change orders, or corners. Neither ends well for the homeowner. When one bid is dramatically lower, the correct response is not to celebrate but to ask what the other two included that this one did not.
Ask your contractor to state, in writing, the assumed unit cost behind every allowance:
| Allowance item | Ask for | Typical realistic range |
|---|---|---|
| Floor tile | $ per sq ft, material only | $6–$22/sq ft |
| Countertops | $ per sq ft, installed | $70–$220/sq ft |
| Plumbing fixtures | Per-fixture budget | $400–$2,500 each |
| Lighting | Per-fixture budget & count | $120–$900 each |
| Cabinet hardware | $ per pull/knob & count | $8–$45 each |
| Appliances | Itemized by unit | Varies widely |
| Interior doors | $ per door, installed | $350–$1,200 each |
Then go look at what those numbers actually buy, before signing. An afternoon at a tile showroom with your allowance figure in hand will tell you more about your real budget than any spreadsheet.
A budget that holds is mostly a decision-making schedule. The contractors you enjoy working with are the ones who push you to decide early — not because they are inflexible, but because they know what late decisions cost you.
Budget 15 to 20 percent contingency for a remodel on a home 20 to 50 years old, and 20 to 25 percent on a home over 50 years old. Newer homes and new construction can work with 10 to 15 percent. Contingency covers conditions that could not be seen before demolition, such as dry rot, outdated wiring, or failed subfloor, and should be treated as unavailable rather than as an upgrade fund.
An allowance is a placeholder dollar amount for an item you have not yet selected, such as tile, lighting, or plumbing fixtures. If your final selection costs more than the allowance, you pay the difference. Allowances set too low are the most common reason an accurate estimate becomes a much larger final invoice, so ask for the assumed unit cost behind each one before signing.
A dramatically low bid usually reflects omitted scope rather than genuine efficiency. Items like permits, engineering, painting, or fixtures may be excluded, and a contractor working without margin tends to recover it through change orders or reduced quality. Normalize the bids by lining up allowances, exclusions and specified materials before comparing totals.
California law limits the down payment on a home improvement contract to $1,000 or 10 percent of the contract price, whichever is less. Any contractor requesting substantially more upfront is operating outside the law, and this is one of the clearest warning signs a homeowner can check without any construction knowledge.
Yes. Withholding your budget usually costs you time and money, because the contractor designs and prices something that was never affordable and then has to strip it back. Sharing the real number lets an honest builder tell you immediately whether your scope fits, and where the trade-offs would have to be made. Keep your contingency separate from the number you name.
Phil writes estimates with itemized allowances and states exclusions up front, so the number you see is the number you plan around. Free, and no obligation.
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