Performance bond cost calculator

A performance bond is a surety’s promise to the project owner that the job will be finished on the contract’s terms. The premium is what you pay the surety for that promise, usually billed when the bond is issued. The bond’s face value, its penal sum, is usually the full contract price; the premium is a small slice of it. Our guide to how contractor surety bonds work covers the three-party mechanics, and performance bond vs payment bond sets out who each one protects.

This is a different animal from a license bond. A license bond has a fixed face set by a board and is priced off your credit, which our contractor bond cost calculator handles. A performance bond is priced off the size of the job.

Sureties price contract bonds on a graduated schedule. The first band of contract dollars carries the highest rate per $1,000; each band after it carries its own, usually lower, rate. The rate for a band applies only to the dollars inside that band, the way income tax brackets work.

1. § 1Type the contract price. On a bonded job the premium is charged on the price of the work, not on a separate bond amount.
2. § 2Replace the example bands with the schedule your surety or agent quoted: how many dollars each band covers and the rate per $1,000 inside it. Add or remove bands to match.
3. § 3If your surety charges for the payment bond on top of the performance bond, enter that as a percentage of the base. If it is one premium for both, leave it at 0.
4. § 4Enter the maintenance (warranty) years the contract demands, how many your surety includes, and what it charges for each extra year.
5. § 5Tick the SBA box only if the bond is going through SBA's Surety Bond Guarantee program. Then print or copy the working for your bid file.

Three contract sizes run through the calculator’s pre-filled schedule. That schedule is a worked example, not a quote and not a market average; the point is the shape. Watch the premium as a percentage of the contract fall as the job grows, and see what happens if someone wrongly applies the first band’s rate to the whole price.

With a two-year maintenance period, one year inside the base and the example’s charge for the second, the $750,000 job moves from $11,000 to $11,110. Small, but it belongs in the bid, beside the cover in what contractor insurance costs.

The payment bond

On most bonded jobs the owner wants a payment bond beside the performance bond, so subcontractors and suppliers get paid. Many sureties quote the pair as one premium; some add a charge. Ask which, and use the payment field to match the answer.

Maintenance and warranty periods

A performance bond often stays on through a warranty or maintenance period after completion. A surety may include a period in the base premium and charge for a longer one. Read the contract’s warranty clause before you price, not after.

Change orders

On a federal job, when the contract price goes up, the required penal sum goes up by 100% of the increase (FAR 28.102-2). Expect the surety to bill premium on the added amount, and ask how it handles a deductive change. Rerun the calculator with the new price to see the difference.

On federal construction, the Bonds statute (formerly known as the Miller Act) decides whether you need a bond at all. The FAR sets the working thresholds; the solicitation tells you exactly what a given job needs.

A bond is not insurance for you: if the surety pays a claim, it comes back to you for the money. Surety bond vs general liability insurance explains the difference, and every bond and policy we cover sits in the bonds and insurance section.