HouseChalkFixed-Price Contract
A fixed-price (or stipulated sum) contract is an agreement where the builder agrees to complete the project for a single, guaranteed total price.
Why it matters
It gives you budget certainty. The builder takes the risk of cost overruns, but they also get to keep the savings if they come in under budget.
Where people get this wrong
A fixed-price contract is only fixed if you do not make changes. 'Allowances' within a fixed-price contract can still increase the total cost if you select premium finishes.
Real-world example
The contract says $500,000. If the builder runs into scheduling inefficiencies and spends $520,000, they absorb the $20,000 loss, and you still pay $500,000.
Where this hits your build
This comes up early, before construction starts. It affects your contract, your budget, or both. Misunderstanding it can cost you money or leverage.
Most people do not just struggle with terms. They struggle with the decisions tied to them.
See how HouseChalk helps with the decisions behind terms like this