Unit Rate

A unit rate is a predetermined price applied to a single, measurable unit of work. Instead of pricing the total job as a lump sum, each element of the scope is broken down into quantifiable units and assigned a fixed rate. The total contract value is then calculated by multiplying each rate by the actual number of units completed or delivered.

A groundworks contractor might price excavation at a set rate per cubic metre. An electrical installer might charge per circuit installed. A landscaping team might quote per square metre of block paving laid. In each case, the type of work is well-defined, but the exact volume may only be confirmed once the project is underway.

How Unit Rates Are Used in Contracts

Unit rate pricing is particularly common in construction, civil engineering, groundworks, electrical installation, and landscaping - anywhere the type of work is repeatable but the quantity is variable. A bill of quantities will typically list each work item alongside an estimated quantity and a unit rate, with the total calculated from the two.

Because payment is based on measured quantities rather than a fixed total, unit rates suit projects where scope may evolve. If ground conditions require more excavation than originally estimated, the contractor is paid for the additional units at the agreed rate rather than having to negotiate a new price or absorb the extra cost. Equally, if fewer units are needed, the client pays less.

Variation orders also become simpler under a unit rate contract. If a client adds extra scope - an additional electrical circuit, another section of paving, more planted beds - the price for that addition is already established in the contract. Both parties can agree the variation quickly without creating a new rate from scratch.