Firm Price vs. Cost-Plus: Which Contract Is Right for You?
When you start talking to custom home builders, one of the first things you'll encounter is the pricing model. The two most common approaches are firm price and cost-plus contracts. Understanding the difference can save you thousands of dollars — and a lot of sleepless nights.
What Is a Cost-Plus Contract?
With a cost-plus contract, you pay the actual cost of materials and labor, plus a percentage markup for the builder's profit. Sounds fair in theory, but here's the catch: your final price isn't determined until the house is finished. If lumber prices spike, if a subcontractor charges more than expected, or if supply chain issues cause delays — you absorb those costs.
Cost-plus contracts can work well when the builder is transparent and the market is stable. But in today's environment of fluctuating material costs, they introduce significant financial uncertainty.
What Is a Firm Price Contract?
A firm price contract means you agree on a total price before construction begins — and that price doesn't change. Period. At Newhoff Construction, we make this possible by finalizing every single selection (materials, finishes, fixtures, appliances) before you sign the contract. Then we order all materials immediately, locking in prices before they can increase.
Why We Believe in Firm Price
Building a home is stressful enough without worrying about your budget spiraling out of control. Here's why we exclusively offer firm price contracts:
Budget certainty
You know exactly what your home will cost from day one. No surprises at the end.
Protection from market swings
Material prices go up? That's our risk, not yours. We order everything at contract signing.
Easier financing
Lenders love firm price contracts because there's no ambiguity about the final cost.
Less stress
You can enjoy the building process instead of anxiously watching invoices pile up.
The Trade-Off
The one thing firm price requires is more work upfront. You need to make all your selections — countertops, flooring, cabinets, fixtures, paint colors — before signing the contract. Our design phase typically takes about 3 weeks with 2 revision rounds. It's more intensive at the start, but it means zero surprises during construction.
Questions to Ask Any Builder
Regardless of which contract type you prefer, here are questions every homeowner should ask:
- What's included in your price — and what's not?
- How do you handle material price increases after signing?
- What happens if I want to make a change during construction?
- Can I see a detailed cost breakdown?
- What warranties do you offer?
Want to Learn More About Our Firm Price Guarantee?
Schedule a free consultation and we'll walk you through exactly how our pricing works — no pressure, no obligation.
Get a Free Consultation