Q:

How much does a performance bond cost?

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Performance bond costs, as with credit or other types of insurance policies, vary widely based on a number of different factors. Some of these factors include the type of project the bond is for, the applicant's credit history and the location where the bond is required. Typically, standard rates for performance bonds range between 1 and 3 percent of the total bond amount requested.

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Other factors that determine the cost of a performance bond are the type of industry the bond is being used for and the particular surety company that issues the bond. ACHR News explains that surety companies vary in the way that their performance bonds are written and in how their fees are charged. Some companies charge a flat fee, while others charge a certain percentage of the total amount of the bond. For a bond applicant with a good credit rating and a solid financial history, bond rates can be as little as .5 percent of the total value of the bond, according to Construction Law Today. High-risk applicants, such as those with bad credit histories, can expect to pay higher performance bond rates, usually anywhere between 5 and 20 percent of the total bond amount, says the ACHR News.

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