Cost-plus home building
Cost-plus vs fixed price: which contract fits your custom home?
On a cost-plus contract you pay the actual cost of labor, materials, and subcontractors plus a builder fee. On a fixed-price contract you agree to one number up front. Both can work — but they put the risk in different places.
How a cost-plus contract works
The builder passes through real costs and adds a fee, set as a percentage of cost (often 10–20%) or as a fixed amount. The appeal is open books: you see what things actually cost. The catch is that the homeowner carries the risk of anything that costs more than planned.
How a fixed-price contract works
The builder prices the whole job up front and builds in a margin for risk. You get a predictable number, but changes and allowance overages are still billed — usually as change orders.
Why cost-plus homes go over budget
- Allowances set too low. When your real pick costs more, you pay the gap — and on cost-plus, usually the fee on it too.
- Late selections. Crews that wait on a decision get rescheduled, and those hours land on the next invoice.
- Small changes adding up. Each tweak is "only a little more" until the total shows up late.
- Duplicate or unclear charges. Without one shared record, it's hard to match each invoice line to a decision.
What protects you either way
A complete checklist made before construction, with each selection tied to its allowance and a record of who decided what and when. That's what the 57-phase ShackSTAC checklist is for. See also construction allowances explained.
Put every selection and allowance in one shared checklist.
Start your build checklist