08/28/2026
There are two ways contractors charge: Fixed Price or Cost+
The fixed price contractors are more common, but often result in much lower margins. It’s often the silent killer of construction businesses. Why?
Too many variables change from proposal to construction..and this happens most often when you’re already deep in the project.
Now you’re asking yourself: do I ask the customer for more money or do I eat the cost and not make any money?
Fixed price contractors sometimes pad their bids to avoid this problem.
Now, the sale becomes so much harder because you’re the highest price bid.
And with that comes higher commissions to sales guys. More expensive marketing. Pushy sales tactics.
The fact is - you should NEVER eat the cost of a customer’s home improvements. It will eat your business alive.
The way out is by charging Cost+ - here’s how:
Set expectations up front on how it works, actively update the customer on all costs with receipts, and charge a margin based (not markup) fee to cover your profits and overhead.
10% project management & scheduling fee to cover your overhead.
20% contractor fee to make a profit.
You collect profits throughout the entire project, not having to wait until the final bill. Cashflow & profitability stay moving in your business.
When unforeseen problems arise or your customer changes scope it’s not a problem..because the customer is paying for the work, not you.
The crazy thing is..customers love this model MORE than fixed price.
It works better for them because they’re only paying what the project actually costs - never more than what they need.
On top of that, you build trust by giving them complete visibility into all transactions. They always know every expense before they can even ask.
Lastly, with Cost+, it’s a Pay-As-We-Progress model. Customers aren’t paying huge lump sums that put them, and therefore you, in a tough cash position.
As work gets done, the customer pays the bill and cash stays moving.
Guaranteed Win-Win.
Comment “Profit” to get the 7-step guide on how to build and pitch a Cost+ system that works for your customers.