Anatomy of a Renovation Quote in Ontario (2026): A $60,000 Kitchen Needs $76,800 in the Bank
The quote is not the budget. Two lines sit outside it, and both of them are yours.
In short
A renovation quote is six lines pretending to be one number: labour (35–50% of the job), materials, subcontractors, overhead and profit (12–18%), allowances, and HST at 13%.
Two of those do not appear on the contractor’s paper at all. HST is added on top, and contingency — 15 to 20 per cent on a renovation — is money you hold yourself. On a $60,000 contract that is $7,800 of tax and roughly $9,000 of contingency: $76,800 before anything unexpected happens.
Which is why the cheapest quote so often ends up costing the most. It is rarely a cheaper builder. It is usually a thinner scope, lower allowances, and no contingency anywhere in sight.
What is actually inside a $60,000 quote
Proportions vary by job. The shape does not.
| Line | Share | On a $60,000 contract |
|---|---|---|
| Labour | 35–50% | About $24,000 |
| Materials and fixtures | 30–40% | About $21,000 |
| Subcontractors | Varies by trade mix | About $6,000 |
| Overhead and profit | 12–18% | About $9,000 |
| Contract subtotal | — | $60,000 |
| HST at 13% | Added on top | $7,800 |
| Your contingency, 15% | Held by you | $9,000 |
| What you actually need available | — | $76,800 |
The figures are illustrative arithmetic, shown so you can substitute your own. The point is the last row: the number you are quoted is about 78 per cent of the number you need.
Is the contractor’s markup a rip-off?
No, and understanding what it buys makes the rest of the quote readable.
Overhead and profit usually run 12 to 18 per cent of the job, with material markup commonly 15 to 25 per cent. Out of that comes liability insurance, WSIB coverage, vehicles and fuel, tools, the office time spent scheduling five trades so they do not arrive on the same morning, and the warranty work that happens a year later for free.
A quote showing no markup has not eliminated those costs. It has hidden them inside the labour rate, or it belongs to someone who is not carrying insurance at all — which, if a worker is hurt on your property, becomes your problem.
So the useful question is not “why is there a markup”. It is “what is the markup and what does it cover”, asked once, politely, before signing.
Allowances: the mechanism that makes a quote look cheap
This is the single biggest reason two quotes for the same kitchen differ by $25,000, and most homeowners have never heard the word.
An allowance is a placeholder. The contractor does not yet know which tile, faucet or countertop you will choose, so they insert a budget figure — say $40 a square foot for tile. If you pick tile at $95, you pay the difference. The quote was never wrong; it was provisional, and you did not read it as provisional.
A contractor quoting $52,000 with tile at $25 a foot and one quoting $68,000 with tile at $70 a foot are not competing on price. They are describing different kitchens. Put the two allowance schedules side by side and the gap usually explains most of the $16,000.
What to ask for, in writing: every allowance, itemised, with the unit figure. Then price the things you actually want and adjust the quote yourself before you compare anything.
The line that predicts your final bill
Contingency. It is almost never in the quote, because it is not the contractor’s money — it is yours.
New construction can run on ten to fifteen per cent, because nothing is hidden. A renovation is different by nature: you are opening walls in a house built by people you cannot ask. Knob-and-tube wiring, aluminium branch circuits, a joist someone notched for a pipe in 1974, no insulation, mould behind the tub surround, a floor that is out of level by an inch and a half. None of it is on the drawings.
Budget 15 to 20 per cent and do not tell yourself it is optional. A renovation that comes in on the quoted number is a renovation where nothing unexpected was found, and that is the exception rather than the rule.
If nothing turns up, you kept the money. That is the only version of this where you win.
HST, and the quote that does not mention it
A registered contractor charges 13 per cent on the entire invoice — labour, materials and subcontracted work. Not on materials only. On a $60,000 job that is $7,800, and it is the single most common budgeting mistake people make.
A quote with no HST on it means one of two things. It may be a genuinely small operator below the registration threshold, which is perfectly lawful. Or it may be cash work with no invoice — which is a different proposition entirely.
Cash with no paperwork costs you four things: any warranty, any recourse if the work fails, any lien or contract rights, and any proof for an insurer if there is a fire or a flood traced to the work. The saving is 13 per cent. The exposure is the whole job.
Deposits, payments and the rules behind them
Ontario’s Construction Act governs how renovation money moves, and it changed on 1 January 2026.
The Act is technical and this is a summary, not advice. On a large renovation, an hour with a lawyer before signing costs less than the first dispute.
Three free checks before you sign
All three are public databases, and together they take about five minutes.
Red flags in a quote
What to do next
Before you compare a single quote, do two things. Add 13 per cent for HST and 15 per cent for contingency to whatever number you have in your head — that is your real budget. Then ask each contractor for the allowance schedule in writing, with unit figures.
Those two steps turn three incomparable numbers into three comparable ones, and they cost nothing.
Compare renovation and construction companies in Ontario on Ontario24 and contact them directly. Ontario24 is a classified directory — we help you find and compare, and we do not vet anyone, which is why this guide points you at the public registers instead. Our guide to choosing a contractor covers the interview, the kitchen guide and the bathroom guide cover the ranges, and the basement guide covers why one phrase hides four different builds.
Before you call anyone, it helps to know what this job should cost and what the next one will. What things cost in Ontario in 2026 puts 75 service prices in one table.
Frequently asked questions
Six lines, not one number: labour, materials, subcontractors, overhead and profit, any allowances, and HST. A quote that gives a single figure with a one-line description cannot be compared against anything — and it is not a written estimate you can hold a contractor to.
Roughly 35 to 50 per cent on a typical residential renovation, with trades billing between about $50 and $140 an hour depending on the trade. Licensed trades sit at the top of that range — electricians and plumbers in Toronto bill well above the average.
Overhead and profit generally land between 12 and 18 per cent of the job, with markup on materials commonly 15 to 25 per cent. That is not a hidden fee: it pays for insurance, WSIB, vehicles, warranty work and the time spent coordinating trades. A quote showing no markup has buried it somewhere else.
Fifteen to twenty per cent, held by you rather than written into the contract. New construction can work on ten to fifteen because nothing is hidden. A renovation opens walls, and what is behind them is the whole reason renovations go over budget.
Yes — 13 per cent on the whole invoice, labour and materials and subcontracted work alike, where the contractor is registered. A quote showing no HST may mean a small supplier below the registration threshold, or it may mean cash work with no invoice, which leaves you with no warranty, no recourse and nothing to show an insurer.
Commonly 10 to 15 per cent to hold a start date and order materials, with the balance tied to milestones. A demand for half the contract up front, or for cash, is the moment to slow down and get everything in writing.
Not long. Amendments to Ontario’s Construction Act took effect on 1 January 2026 and tightened the invoice process: an owner who does not raise a problem promptly risks being treated as having accepted the invoice. Read invoices the day they arrive and put any objection in writing immediately rather than waiting to discuss it.
Sources
Checked 17 September 2026. Cost proportions — labour at 35 to 50 per cent, overhead and profit at 12 to 18 per cent, material markup at 15 to 25 per cent and contingency at 15 to 20 per cent on renovations — are drawn from published 2026 Canadian contractor and estimating guidance; they are conventions rather than rules, and they vary by trade mix and project size. The worked example is plain arithmetic, shown so you can substitute your own figures. HST is 13 per cent in Ontario and applies to the whole invoice where the contractor is registered. Payment, holdback, invoice and lien rules are set out in the Construction Act, R.S.O. 1990, c. C.30, as amended with effect from 1 January 2026; this guide summarises the shape of those rules and is not legal advice. Consumer protection rules on written estimates are administered through Consumer Protection Ontario, which also publishes the Consumer Beware List. Compulsory trades are administered by Skilled Trades Ontario and electrical permits by the Electrical Safety Authority. On a large renovation, take legal advice before signing. Ontario24 is a classified directory and does not perform, estimate or supervise renovation work.