Episode
Cost Plus vs Fixed Price — Which Contract Protects You?
- Published
- May 2, 2026
- Duration seconds
- 2519
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Summary
Cost plus or fixed price? It's the question your contractor asks just before you sign — and most homeowners walk into the answer blind. Episode 55 launches a brand-new sub-series inside the World of Construction playlist: Contracting Methods. And this first episode lays the foundation everything else will build on. Get Your Free Contract Decision Tool In plain English, Bill Reid breaks down what cost plus actually means, what fixed price actually means, and why this conversation is really about risk — not price. You'll meet the risk pendulum, the visual model that explains where every contract method sits between you and your contractor. You'll learn the four components required to even get a fixed price contract — and notice that three out of four are about you and your design team, not the contractor. You'll recognize the five triggers that push homeowners into cost plus by default, sometimes without realizing it. And you'll work through a six-question framework that picks the right contracting method for your situation. Bill also walks through one of the biggest mistakes homeowners make at the bid stage: comparing a cost plus initial estimate against a fixed price proposal as if they're the same kind of number. They aren't. One is a guess with no ceiling. The other is a commitment with contingency built in. On most well-documented residential projects, fixed price comes in at or below where cost plus would have landed at completion — not at the bid stage, but at the finish line. The cost plus number that looked cheaper at the start is almost never the number you actually pay at the end. Whether you're planning a custom home build or a major remodel, this episode will give you the foundation to walk into your contract conversation with eyes wide open. In This Episode…