How much do performance and payment bonds cost?

Performance and payment bonds typically cost 0.75%–3% of the contract amount as a first-term premium, and the rate slides down as the contract gets larger and your credit and financials get stronger. On a $1,000,000 contract, that's roughly $7,500–$30,000, with well-qualified contractors landing near the low end. Premium is charged on the contract (bond) amount, not on your profit.

Typical bond rates by contract size and credit

The table below shows typical effective first-term rates as a percentage of the contract amount. These are estimates to plan against — your exact rate is set at underwriting once the surety sees the job, your financials, and your credit.

Many sureties price on a tiered schedule — a higher rate on the first band of contract value and lower rates on the amounts above it — so the blended rate on a large contract comes in below the headline percentage. On established programs, volume and strong financials can push effective rates under 1%.

What drives your rate

• Contract size — larger contracts carry a lower percentage rate.
• Financial strength — working capital and net worth relative to the job.
• Financial statement quality — CPA-reviewed or audited statements earn better rates than internal ones.
• Personal credit of the owners — especially on smaller and credit-based programs.
• Track record — a clean history of completed, profitable work of comparable size.

Bid bonds are usually free

A bid bond is almost always issued at no premium — the surety earns its premium on the performance and payment bonds if you win the job. So the cost figures above apply to the final performance and payment bonds, not the bid bond.

Want your exact number? Send us the contract amount and your latest financials and we'll quote the real rate — often the same day. If your job is within our Express limits (up to $3,000,000 for contractors), we can frequently qualify you on credit alone.