Should I Use a Cost Plus or Fixed Price Contract?

Cost Plus or Fixed Price Contract

Top 10 Upscale Home Features Two Story Family RoomIf you have started the process of looking for the perfect team to design and build your custom home, chances are you are trying to understand which of these is the best option for you: Cost plus or fixed price contract?

Cost plus pricing refers to a contract where the price is based upon the actual cost of production and any agreed upon rates of profit or fees. Fixed price method means that the total price for your home will be set in advance and will not changed (notwithstanding any “allowances” or budget items that the owner will select during construction such as lighting and plumbing fixtures). Both methods for pricing new home construction projects have advantages and disadvantages.

Advantages of Cost Plus

  • Decreases in costs are passed on to the buyer if the project comes in under budget.

Advantages of Fixed Price

  • Price is often guaranteed. Buyers know exactly what to expect when the final bill is presented.
  • Unplanned increases in costs are absorbed by the builder, not the buyer.

Disadvantages of Cost Plus

  • Unplanned increases in costs are absorbed by the buyer, not the builder.

Disadvantages of Fixed Price

  • A fixed price model may cost the buyer more than anticipated, if the job is completed early or if materials cost less than estimated.

Both cost plus and fixed price contracts are successfully used in building new custom homes. We offer clients the option to choose; you can decide which one works best for you.

About Jenkins Custom Homes

best home building experience enjoy the experienceJenkins Custom Homes is a luxury design-build firm based in Austin, Texas. Offering 20+ years of experience and numerous awards for excellence including Best Design, Best Overall, & Best in Texas, Jenkins is the company to call when innovation is desired and exemplary implementation is required. Every home builder has an emphasis, something they do extremely well because they have focused on it over the years. At Jenkins Custom Homes, it’s the art of design and science of building a home, resulting in a balance between great design and enhanced construction methodology. This has also led to their reputation as the builder of choice for waterfront custom homes, golf course homes and private estate homes.

Learn more at www.newhousebuilder.com or call 512-461-7990.

"We have been extremely happy with every process of the construction of our home with Jenkins Custom Homes."

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