Cost + Margin vs Fixed Price

The two contract types we offer for a custom home or renovation project are cost-plus and fixed price. Under a fixed price contract, the total cost is established in advance. On the other hand, in a cost-plus contract, the expenses are projected, and the final price is determined upon project completion.

What is a Cost-Plus Contract?

This approach is generally preferred by our clients.

We provide you with initial expense estimate and subsequently we’ll provide detailed documentation of all expenses through weekly or fortnightly invoices being full transparent, including the expenses along with an agreed percentage markup.

Pros: Full open book, if the project comes in under the estimate, you will of course benefit with an overall reduced cost. Additionally, the percentage markup on a cost plus is lower, as the risk is mitigated.

Cons: If the cost of materials increases throughout the build process, the overall cost of the project will also increase.

What is a Fixed Price Contract?

Under a fixed price contract, you’ll have full knowledge of the final cost right from the start, encompassing all materials, labour, fees and additional expenses. Thanks to our strong partnerships with suppliers and sub-contractors, we can ensure stable and locked in pricing for your project.

Even if there are price hikes for certain products or services after you’ve signed the fixed price contract, you can rest assured that we will absorb these additional costs. You won’t be charged for any increases, as we stand by the agreed-upon fixed price.

Pros: No cost fluctuations, you will have a pre-approved payment plan, and nothing will change, unless you initiate variations.

Cons: Can often result in clients paying a premium price as we have had to factor in projected price increases from our suppliers.