When investing in a luxury home in Utah, the contractor's fee model has a significant impact on the overall cost of your custom luxury home. Contractor fees can vary from tens to hundreds of thousands of dollars, depending on the contractor that you select and the model that they use. The two most common contractor agreements are fixed builder's fee contracts and cost-plus contracts. Each approach shapes how a budget is managed, how risks are shared, and how the project unfolds.
Understanding the difference is the first step toward making a confident decision. The second step is learning why our team at E Builders is one of the only Utah luxury home builders to offer a fixed builder's fee model and how it will save you thousands on your custom home build
Here's what you can expect in this blog:
Cost Plus vs Fixed Builder's Fee
The cost-plus approach means the contractor will take the cost of your home, add their fees (typically a percentage of the material cost and administrative fees), and you will pay the cost of materials plus their various fees. The more your home costs, the more money the contractor makes.
In short, the longer it takes to build your home and the more money it costs, the more money the contractor will make on your home. Does this sound like a win/win, or a good deal? We believe the cost-plus model creates all of the wrong incentives.
At E Builders, we believe in doing business with our clients in the same way that we would want to be treated. We believe in full transparency, and contract with our clients in a way that incentivizes us to complete their custom luxury Utah homes on time and on budget. We use a fixed builder's fee model. This means that we establish a fixed fee for our services prior to commencing construction. While actual material costs may vary during the build, our fees are set. This means that we are incentivized to complete your home on time and on budget. This aligns both of our interests and puts us on the same team with the same goals.
The cost of a custom home or the price of a remodel aren't numbers to take lightly, so it's important to understand which contract type will work for you.
Contract Type Overview
As you research construction contracts, you will encounter a range of terms that can initially seem overwhelming. When you read about fixed fee contract advantages and disadvantages, you will often see the tradeoff between budget certainty and reduced flexibility. Firm fixed fee vs cost plus compares a set builder’s fee with one that increases as costs rise.
Fixed fee vs lump sum highlights the difference between a contract where only the builder’s compensation is fixed and one where the entire project total is determined in advance. A lump sum is common when you're purchasing a pre-built home.
What Is a Fixed Fee Contract?
A fixed fee agreement sets your builder’s compensation as a flat rate, agreed upon before construction begins. Material and labor costs are billed at actual cost, but the builder’s fee stays the same.
This structure also keeps your builder motivated. The longer a project takes, the more it costs your builder, not you. That means we’re just as invested in finishing on time and managing costs as you are.
Fixed Fee vs Fixed Price
It’s easy to confuse these similar terms, but they are very different. Below, we've sketched out a comparison so that you can know the difference:
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Fixed Price: Locks in the total cost of the entire project, including materials, labor, and builder compensation. This approach is only used by production builders because they build the same home repeatedly and can accurately project their costs. Fixed pricing does not work for luxury homes, as they are all created according to the homeowners ' selections, and thus, there is no way to have a fixed price on a custom home until it is complete.
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Fixed Builder Fee: Locks in only the builder’s compensation. Material and labor costs are billed at actuals, providing transparency into where your money goes while maintaining a consistent builder’s fee. This is what you want to look for when building a custom home.
Advantages of a fixed builder's fee
For many homeowners, this approach provides comfort because the builder's fee is clear from the start. Financing and loan approvals are often easier, billing is straightforward, and there are fewer unexpected changes during construction.
What Is Cost Plus?
What does cost plus mean in construction? The answer: a cost-plus contract bills you for the actual expenses of the project, plus a builder’s fee and administration costs. A cost-plus builder is simply a builder who works under this model, and the cost-plus fee is the builder’s compensation, usually calculated as a percentage of your project’s expenses and typically has a second component for administrative costs. Your cost-plus estimate is a flexible projection that can change as market prices shift.
Risks of Cost Plus
A notable disadvantage is that there is no defined ceiling on total cost, and there's less incentive to complete a project within a deadline, as builder fees increase when a project's duration is extended. Since the builder’s fee grows as project costs increase, you take on more financial risk. This type of contract also requires more involvement and oversight from the homeowner and is often less appealing to lenders. Currently, the market and cost of goods fluctuate frequently, making a cost-plus contract susceptible to significant cost discrepancies.
For luxury custom homes and remodels, these risks can escalate quickly. Even small scope changes or market fluctuations can significantly affect the final cost.
Why E Builders Uses a Fixed Builder’s Fee Agreement
Luxury should be defined by quality and certainty, not by financial surprises. Our fixed builder's fee is a contract structure designed to deliver transparency and the stability of a fixed price for our services.
Under this model, the builder’s fee is agreed upon before construction begins and never changes. Clients pay the actual costs for labor and materials without hidden markups, and every invoice is visible through our construction management software. You'll know exactly where every dollar is going, and because the builder’s compensation does not increase if project costs rise, both parties remain aligned.
The Utah Builder and Remodeler You Choose Matters
Not every builder in Utah offers this level of transparency. Many still rely on traditional cost-plus agreements that shift risk onto the homeowner, while others stick to rigid fixed fee contracts that limit personalization and provide little insight into actual costs.
E Builders takes a different approach. Professionalism, branding, and consistency define the experience. From clean job sites and branded trucks to long-standing partnerships with skilled trades, every detail reflects a commitment to excellence. We can even help you decide whether you should move, remodel, or build new this year.
If you're researching Utah home construction or Utah remodelers, we'd love to be considered. Take a look at our cost guide resource to get an idea of prices when you work with us.
Working with E Builders
Our clients are often tech professionals, business owners, executives, and families relocating to Utah. Many are creating second homes or retirement properties in resort towns, while others are building primary residences that support an active lifestyle. When you choose to work with us, we're able to give you an expectation for luxury, professionalism, and a smooth process that allows you to enjoy the experience as much as the finished home. Take a look at our portfolio and imagine what's possible.
Contact Us
Contact us today to learn more or to schedule a consultation. We would be honored to discuss your project.
