When investing in a luxury home or remodel in Utah, the contract chosen is just as important as the design itself. The two most common construction agreements are fixed price 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 knowing why our team at E Builders offers a refined version of the fixed price model to give our clients the best experience possible.
Here's what you can expect in this blog:
Cost Plus vs Fixed Price
The decision between cost plus and fixed price depends on your priorities. If you value maximum flexibility, you may lean toward cost plus, while a fixed price better serves someone who wants financial clarity. The cost of a custom home or the price of a remodel aren't numbers to take lightly, so it's important to understand what contract type will work for you.
Contract Type Overview
As you research construction contracts, you will come across a range of terms that can feel overwhelming at first. When you read about fixed price contract advantages and disadvantages, you will often see the tradeoff between budget certainty and reduced flexibility. Firm fixed price 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.
What Is a Fixed Price Contract?
A fixed price contract, sometimes called a lump sum contract, establishes the total project cost before construction begins. This number includes materials, labor, and the builder’s compensation. Unless you make changes to the project scope, the cost does not change.
Advantages of Fixed Price
For many homeowners, this approach provides comfort because the budget is clear from the start. Financing and loan approvals are often easier, billing is straightforward, and there are fewer unexpected changes during construction.
Limitations of Fixed Price
The tradeoff is that flexibility becomes limited once construction begins. Builders may also include extra contingency padding to protect themselves from unexpected costs, which can inflate the contract amount. In addition, some homeowners may feel they have less visibility into the breakdown of actual expenses.
In Utah’s competitive luxury market, predictability is valuable, but a lack of transparency can leave some clients feeling disconnected from their own project. It's important to work with a team like E Builders, which builds fixed-priced contracts with enough flexibility to protect you and enough consistency to assure you.
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. 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. Your cost-plus estimate is a flexible projection that can change as market prices shift.
Benefits of Cost Plus
The benefit of this model is that it provides flexibility to make changes throughout the build. Pricing reflects real-time market conditions, and work can begin even before every detail is finalized. This is particularly helpful in a stable market.
Risks of Cost Plus
The disadvantage is that there is no defined ceiling on the total cost. Since the builder’s fee grows as project costs increase, the client takes on more financial risk. This type of contract also requires more involvement and oversight from the homeowner and is often less appealing to lenders without a guaranteed budget. 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 combine the transparency of cost plus with the stability of a fixed price.
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 price 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.
