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Factors Influencing Bond Costs
Several factors influence the cost of performance and payment bonds, including the contractor’s credit history, the size and scope of the project, and the specific requirements of the bond. Generally, the cost of a performance bond is a percentage of the total contract value, typically ranging from 1% to 3%1. Contractors with a strong credit history and a proven track record may secure lower rates, while those with less favorable credit may face higher premiums. Additionally, the complexity of the project and the financial stability of the contracting firm can also affect bond pricing.