An allowance lets a contract be signed before every finish is picked. The contractor budgets a reasonable figure, say $3,800 for a vanity and top, and the contract says the client pays any amount above it and receives a credit for any amount below. The trouble starts when the contract is silent about whether the allowance includes markup, delivery and installation, or about how an overage is priced.
A worked number
Vanity allowance $3,800. The client's choice costs $6,100 delivered. Overage $2,300. If the contract says overages carry the job's 25% markup, the change order is $2,875; if it says nothing, the contractor usually ends up passing the $2,300 through at cost and paying the extra installation hours out of margin.
The mistake it hides
Ordering before writing. The selection gets ordered to keep the schedule, the overage gets discussed at the end, and the client remembers the allowance figure better than the conversation. The sequence that works: log the selection against the allowance, write the change order with markup, get it signed, order.
In Obra
Budget each allowance as its own line, record the actual selection cost against it, and enter the overage as a change order so the adjusted contract value moves with it. The change order pricing calculator prices the overage with markup instead of at cost.