Our NewsLearn What's Going On at Thomas Homes

What is the Difference Between a Fixed Price and Cost Plus Contract when Building a Luxury Home?

Fixed Price vs. Cost Plus: What’s the Difference?

When building a luxury home, there are two main types of contracts that you can choose from: fixed price and cost plus. Each type of contract has its own advantages and disadvantages, so it’s important to understand the difference before you make a decision.

Fixed Price Contracts

In a fixed price contract, the builder agrees to build your home for a predetermined price. This means that you know exactly how much the project will cost before construction begins. Fixed price contracts can be a good option if you want to have more control over your budget. However, they can also be more restrictive, as you may not be able to make changes to the plans or materials without incurring additional costs.

Cost Plus Contracts

In a cost plus contract, the builder is reimbursed for the actual cost of materials and labor, plus a profit margin. This means that the final cost of the project will not be known until it is complete. Cost plus contracts can be a good option if you are not sure about your budget or if you want to have more flexibility with the plans and materials. However, they can also be more risky, as you may end up paying more than you originally anticipated.

Which Type of Contract is Right for You?

The best type of contract for you will depend on your individual needs and preferences. If you want to have more control over your budget and are willing to make some compromises on the plans and materials, then a fixed price contract may be a good option for you. If you are not sure about your budget or want to have more flexibility, then a cost plus contract may be a better choice.

Here are some additional factors to consider when choosing between a fixed price and cost plus contract:

• The complexity of the project: A more complex project is more likely to go over budget, so a fixed price contract may not be the best option.
• The builder’s experience: A more experienced builder is more likely to be able to accurately estimate the cost of a project, so a fixed price contract may be a better option.
• Your budget: If you have a tight budget, then a fixed price contract may be the best option.
• Your flexibility: If you are not flexible with the plans or materials, then a fixed price contract may be the best option.

Ultimately, the best way to choose the right type of contract is to talk to a builder and get their recommendations. A good builder will be able to help you understand the pros and cons of each type of contract and make a recommendation that is right for you.

For a Free Consultation, Call Robby Thomas Right Now at 954-210-9797 or email info@thomashomes.com to discuss both options in detail!