Finance & Contracts

Fixed-Price Contract

A contract where the contractor agrees to complete the scope for a defined total price, regardless of actual cost.

Also called "lump sum" — the most common contract type for residential remodel and small commercial. The contractor takes on cost risk; if actual costs exceed the bid, the contractor absorbs it. If costs come in under, the contractor keeps the difference. Requires accurate estimating and tight scope control. Change orders are how new work or scope changes are added to a fixed-price contract.