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New Home Kitchen Allowances: What the Builder’s $15,000 Buys, and Why the Upgrade Sheet Is Where the Money Goes
Kitchen Renovation
New Home Kitchen Allowances: What Is in the Number, and What the Design Centre Does to It
Every new-home contract in Ontario has a kitchen in it, and the kitchen is either a standard specification with an upgrade sheet, or an allowance with a dollar figure. Both are fine and both are where a $700,000 house becomes a $760,000 house, in a room with good lighting and a very friendly design consultant. Here is what the number buys, how upgrades are priced, and how to write an allowance in a custom-home contract so it means what you think it means.
The two ways a builder sells you a kitchen
Standard spec plus upgrades (production builders)
The contract includes “the standard kitchen”: a cabinet line, a door style, a few colours, a laminate or entry-quartz counter, a stainless sink. Everything else is an upgrade at the design centre, priced on a sheet you see after signing. The standard kitchen is a real kitchen and it is builder grade: a 1/2 or 5/8 in. particleboard box, side-mount runners, thermofoil or a basic painted door, 30 in. uppers. Fine, and the reason the house photographs the way it does is the upgrades.
An allowance (custom and semi-custom builders)
The contract carries a dollar figure for the kitchen, say $25,000 for cabinets and $8,000 for counters, and you spend it with the builder’s cabinet shop or your own. Under the allowance, you get a credit; over it, you pay the difference, usually plus the builder’s markup on the overage. What the allowance covers, and whether the markup applies, is the clause nobody reads.
What the standard kitchen actually is
Take a production builder’s “included” kitchen for a 2,200 sq ft house: 16 to 20 ft of base cabinet, 14 to 16 ft of upper, no island or a small one, a stainless double sink, a laminate or a Level 1 quartz counter with a 4 in. backsplash, a single-lever faucet, and the layout the architect drew. At shop retail that kitchen is $12,000 to $18,000 installed, which is the builder-grade line on the cabinet cost page plus a basic counter. The builder pays less than that, because the cabinet shop builds 200 of them a year. Everything that makes it the kitchen in the model home (the stacked uppers, the drawer stacks, the pantry wall, the quartz on the island, the hood fan with a chimney, the under-cabinet lights) is on the upgrade sheet.
How the upgrade sheet prices things
| Upgrade | Typical design-centre price | What a shop would charge on a new kitchen |
|---|---|---|
| Uppers 30 in. to 39 or 42 in. | $2,000 to $4,000 | $1,200 to $2,000 |
| Drawer stacks instead of doors, per base cabinet | $350 to $600 | $200 to $350 |
| Door style upgrade (shaker to five-piece painted) | $3,000 to $6,000 | $2,000 to $4,000 |
| Quartz counter, Level 1 to Level 3 | $3,500 to $7,000 | $2,000 to $4,000 |
| Soft-close hinges and runners | $800 to $1,500 | Often included at mid grade |
| Pot-and-pan drawers, pull-out trash, roll-outs | $300 to $700 each | $150 to $450 each |
| Island added or enlarged | $4,000 to $9,000 | $3,000 to $6,000 |
| Under-cabinet lighting | $900 to $1,800 | $500 to $1,000 |
| Hood fan, chimney style, ducted | $1,200 to $2,500 | $800 to $1,800 |
The design centre price is 30 to 60% over what the same thing costs from a cabinet shop on a new kitchen, and the builder is not hiding it; the upgrade program is a profit centre and the price list says so to anyone who reads it. The upgrades are also usually rolled into the mortgage, which is the part that makes them feel free. A $20,000 upgrade package at 5% over 25 years is about $35,000 paid.
The three things to do at the design centre
- Price the upgrade package at a cabinet shop first. Take the builder’s kitchen drawing to a shop, or run the walls through the cabinet calculator at mid grade, and you have the retail number to hold against the sheet. Some upgrades are fairly priced; some are double. You can only tell with the number in hand.
- Buy the upgrades that are in the walls. The island plumbing, the hood duct, the electrical for the under-cabinet lights, the gas line for the range, the 42 in. uppers (which change the drywall and the bulkhead): these are cheap to do during the build and expensive to add after. Buy those from the builder even at the markup.
- Skip the ones you can do after. Pull-out accessories, drawer inserts, a better faucet, a tile backsplash (most builders charge $1,500 to $3,000 for a subway tile backsplash a tiler does for $900), the appliances. Take the standard, move in, and do them at retail in month three.
The credit question: ask what credit the builder gives if you take the standard kitchen out and supply your own cabinets. The answer is usually $4,000 to $8,000 against a $15,000 standard kitchen, because the builder’s cost is low and the coordination is a headache for them. It is rarely worth it on a production house. It is normal on a custom house.
Writing an allowance in a custom-home contract
This is the part that saves a custom-home client the most money and the most arguments, and it takes five sentences in the contract. An allowance clause should say, in writing:
- What it covers: cabinets supplied and installed, including hardware, fillers, panels, crown, toe kick and delivery; countertops supplied and installed including templating, cut-outs, edges and backsplash; or not. The sink and faucet are in or out. Say which.
- Whether it is before or after HST. A $25,000 allowance before HST and a $25,000 allowance including HST are $3,250 apart.
- Whether the builder’s markup applies to the allowance amount, to the overage, or to both. Most custom contracts are cost-plus and the markup (10 to 20%) is on everything, including the allowance. That is fair if it is stated; it is a shock if it is not. Overage billed at cost plus the same markup, under-spend credited at cost, is the usual honest arrangement.
- Whose shop. The builder’s cabinet shop, any shop, or a named one. A builder who insists on their shop is coordinating one trade they trust; a builder who will let you use any shop is giving you the price competition. Both are defensible.
- What the number was based on. “Allowance based on 18 lin. ft base, 14 lin. ft upper, mid-grade painted MDF door, quartz Level 2” is an allowance that means something. “$25,000 kitchen allowance” is a number that will be argued about.
A kitchen allowance in a custom house in Southern Ontario, for a house with a real kitchen, is $30,000 to $60,000 for cabinets and $8,000 to $15,000 for counters, before the island plumbing, hood and appliances, and the renovation cost page has the same trades broken out for a renovation, which is the right comparison. A builder who puts $15,000 in the allowance for that house is making the base price look good and will see you at the overage.
What is almost never in the allowance, in either kind of contract
Appliances. The range hood duct if the standard hood is recirculating. The gas line. The island receptacle (required by code, and sometimes “an upgrade”). Under-cabinet lighting and its wiring. The tile backsplash. The second sink’s plumbing. Pot lights over the island. The pantry shelving. Ask for each one by name, get the answer in writing, and do it before signing, because after signing the price list is the price list. The contract checklist covers the renovation version of this clause; the new-home one is the same with the design centre’s hours added.
Questions people ask
What is a kitchen allowance in a new home?
A dollar figure in the contract for cabinets and counters. Spend under it, you get a credit; over it, you pay the difference, usually with the builder’s markup. What it covers and whether it includes HST are the two things to have in writing.
How much is a typical kitchen allowance?
Production builders include a standard kitchen worth $12,000 to $18,000 at retail rather than an allowance. Custom builders in Ontario write $30,000 to $60,000 for cabinets and $8,000 to $15,000 for counters on a house with a real kitchen.
Are builder upgrades worth it?
The ones in the walls (plumbing, ducting, electrical, taller uppers), yes, even at the markup. The ones you can add after (accessories, backsplash, faucet, appliances), usually not; buy them at retail after you move in.
Can I supply my own kitchen cabinets to a builder?
On a custom house, yes, and the allowance is written for it. On a production house, the builder gives a small credit (often under half the standard kitchen’s retail value) and it is rarely worth the coordination.
Why are design centre upgrades so expensive?
They are a profit centre, priced 30 to 60% over shop retail, and they are rolled into the mortgage so the price is felt less. Price the package at a cabinet shop before the appointment and buy selectively.
Take the number to a shop first
Before the design centre, before the allowance is signed, run the kitchen through the calculator at the grade you want. Then the sheet is a list of prices, not a surprise.
