06/15/2026
Cost-Plus or Fixed Price Contract? What’s the best option?
Here at Gridiron Construction, we always do cost-plus on a fixed price contractor fee that gets determined before the build even starts, typically between 12%-15% of the total cost of construction. True invoices/vendor receipts get passed on to the client, so they see exactly where their money is going.
Example: plans show 10 ft. Cabinet height throughout for a cost of $40,000. Clients decide they want to lower those to 8 ft. for a total cost of $28,000. That savings of $12,000 can now be used toward something else. There are a hundred scenarios I could use but this gives an idea.
We always build according to what is on the blueprints. If clients make changes during the build process (and everyone does) this will increase or decrease the total cost. With that said, the total construction cost is always an “estimate.” There will be cost overruns on some items, and some will come in under budget. There is no way to determine exactly how much gravel a foundation will take. We strive to come as close to the estimated cost as possible, but projects are constantly changing with client upgrades and some are simply material overruns, but you’re paying for what the home actually costs. It’s honest and transparent and gives the client unlimited flexibility to upgrade or cut back at their discretion.
Builders that do a fixed price contract have to add a lot more “fluff” to the estimated total so if that worst case scenario happens, they’re covered. Then when the client saves money as in the cabinet scenario above, the builder puts that $12,000 back in their pocket.
We hope this helps when deciding on the type of contract that’s best for you.
