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What’s the Value of a Fixed Price Agreement?

March 6th, 2023 | 4 min read

By Jacob Livingston

Construction plans, pencils, calculators, and markers

Understanding pricing for your remodeling project can be difficult. For example, many contractors rely on a system of allowances, which allocates estimated costs to selections you have not actually made, which can result in surprising and unpleasantly high prices.

To combat confusion and provide simplicity in our pricing structure and process, Custom Built uses the Fixed Price Agreement.

As a remodeler with over 15 years of experience helping clients with a wide variety of projects, we value simplicity and clarity in remodeling pricing. We have developed a fixed-price agreement system that promotes accurate expectations and client satisfaction. 

Getting clear information about pricing structure will make you a more informed buyer. You will feel more confident about getting your home remodeled, no matter who builds your project.

In this article, you’ll become familiar with how Custom Built’s fixed-price agreement works as well as circumstances that might happen to alter a fixed price. You’ll also learn how a fixed price applied to your project can offer clarity in an otherwise confusing pricing system.

What is a fixed-price agreement?

A fixed-price agreement is a static, final price based on the scope of work and product selections for your project. A key distinction of this system is that pricing is given after you’ve made specific selections

Once you have finalized your design, scope of work, and product selections during the design phase, you'll be given an agreement with a set price. This process will give you a clear understanding of what you'll actually pay for your project. 

Your fixed-price agreement will budget for everything needed to complete your project, including:

  • Managing and scheduling trade partners
  • All materials, equipment, and labor costs
  • Any necessary permits and inspection fees
  • Project warranty and post-installation service

The benefit of a fixed-price agreement

If you’ve received quotes for your project from multiple contractors, it’s not uncommon to feel confused by the variety of prices or price ranges you’re given. Because different contractors use different pricing systems, they are often difficult to compare.

Some may not give you a price range until you’ve invested lots of time into their process while others give you a seemingly low price before surprising you with hidden costs down the line.

To provide you with clear pricing information throughout our process, we have designed an effective pricing structure that narrows down your price range as your project’s design becomes more developed.

During your initial conversation with one of our project development advisors, you’ll likely be given an estimated price range based on the details you provide.

At your showroom consultation, you’ll receive a more accurate conceptual budget range that is determined after visiting your home and gathering measurements and other details about your project.

Eventually, after a thorough design phase, a fixed price is developed for you.

The goal of our fixed-price agreement is to be transparent, open, and honest the entire time we’re working together to achieve your remodeling goals.

What can change your fixed price during construction?

While a fixed-price agreement is intended to remain static, there are a few circumstances that can cause it to change. These include:

Pre-existing hazards are discovered during construction

Throughout the building process, we may uncover pre-existing hazards in your home that must be taken care of. This changes the scope of work which will result in a change to your fixed price after you have received a fixed-price agreement.

If hazards like mold, rotten wood, or pest infestation are discovered in your home’s structure, they must be addressed before we can continue your project’s construction. It is important to note that many problems are not visible until demolition begins.

Measurements that can only be gathered accurately during construction cause scope of work changes

While we do our best to gather all relevant data upfront, it isn’t possible to be 100% accurate in situations where building materials need to be removed. The demolition of siding, flooring, or drywall may reveal things that were unknowable prior to exposure.

An example would be estimating the number of steps for a deck before the frame has been built. While we are good at estimating elevation in relation to the house and the grade, it isn’t possible to know exact measurements until the frame actually exists. 

If your scope of work and materials only includes nine steps and your deck ends up needing ten, an adjustment to your fixed price will need to be made to account for additional material and labor costs.

Building inspections result in changes

It isn’t uncommon for building inspectors to require contractors to make changes or additions in order to pass inspections. 

Typically, these kinds of changes are ordered because pre-existing structural elements should be in your home but aren’t. To pass inspections we must make a change to your scope of work and materials needed, which will change your fixed price. 

During the on-site meeting, we make thorough measurements and inspect your space in order to take all circumstances into account. However, this is another case of not being able to detect everything that might come up until we begin to pull down walls and rip up floors.

You request changes to your design or product selections

It’s not uncommon for clients to request changes to the design or selections that were previously agreed upon. Perhaps you have a change of heart about the color of your flooring or want to upgrade your fixtures to a higher-end brand. We want you to have a finished project you love, and we want you to understand that you can request changes at any time. 

As well, you’ll want to understand that changes to your project’s scope of work or product selections will likely change your fixed-price agreement. This isn’t cause for worry. Changes like these are regularly made by clients. You don’t want to feel compelled to move forward with a previous design if you’ve changed your mind, and we are here to work with you to help you make the changes you want.

We’ll begin a change order process to address revisions to your scope of work and design. This involves going through the 3D renderings and approving the updated plan with the new additions.

Next steps after receiving your fixed-price agreement

Having clear information about remodel pricing and pricing structure is essential for a positive remodeling experience. 

As a remodeler with over 15 years of experience working directly with clients, we often hear how frustrating it can be to receive unclear or inaccurate quotes for remodeling projects. We value being honest and transparent in our pricing system. 

Our fixed-price agreement and pricing structure give you clear expectations and promote a positive remodeling experience overall.

Are you remodeling your home and want to know if Custom Built is the right design and remodeling company for you? Reach out to one of our project development advisors. They’d be happy to discuss your project with you.

Want to learn more about budgeting for your project? Read the following articles:

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Jacob Livingston

Jacob brings 20+ years of residential construction experience to the Custom Built team. He has spent years in the field learning the hands-on side of building from foundation prep to roofing shingles. With a need-to-know mindset and a desire to understand how things work, Jacob has studied building science, systems integration, home inspection, and radon measurement and mitigation.