What is a Cost-Plus Pricing Structure?

No doubt that you're aware of a fixed-price way of pricing and "time & materials", but many aren't aware of what cost-plus actually means. Let's break down a Cost-Plus pricing structure further.

When it comes to building a custom home, few topics are more important - or more misunderstood - than pricing. As a homeowner, you want as much clarity as possible: how much will the project cost, where is your money going, and how do you protect yourself from surprise expenses along the way?

At Unshakeable Custom Homes, I believe in honest conversations about cost, and that starts with choosing the right pricing structure. For the bulk of our projects, I use what’s known as a cost-plus contract. It’s a model rooted in transparency and flexibility, and when managed properly, it can be a very homeowner-friendly way to build.

Let’s break it down in plain language: what a cost-plus pricing structure really means, how it works, what’s included, and why it’s a smart fit for building a custom home in Star Valley, Wyoming.

What Is a Cost-Plus Contract?

A cost-plus contract is exactly what it sounds like: you, the homeowner, pay the cost of construction plus an agreed-upon fee to the builder. That fee is a fixed amount or a percentage of total project costs, depending on the scope and scale of the work.

The “cost” portion includes all direct expenses: labor, materials, equipment, sub-contractors, permits, and anything else required to bring your home to life. These are itemized and documented throughout the build.

--And as a side note, if you're planning to finance a home through a construction loan, the draw request process lends itself well to integrating a builder that uses a cost-plus pricing structure.--

The “plus” portion covers the builder’s management fee - what I earn for coordinating the project, supervising trades, ensuring quality, keeping the schedule on track, and serving as the point of contact from start to finish.

Unlike a fixed-price contract, where a builder sets a total price upfront (often padded to protect against unknowns), cost-plus gives you a detailed, open-book view of what things actually cost, and it allows you to make changes easily along the way.

Why I Use Cost-Plus for Custom Homes

In a perfect world, building a home would be predictable down to the dollar. But the reality is more nuanced. Materials fluctuate. Site conditions vary. Design choices evolve. And in a rural region like Star Valley, Wyoming, availability and logistics can change the picture.

The cost-plus model works because it prioritizes flexibility and communication. Instead of locking you into a fixed number based on a shot in the dark, it invites you into the process through detailed planning and forethought. You get visibility into where your money is going, and you have the freedom to adjust as your needs or preferences evolve.

Here’s what that looks like in practice:

• If you decide mid-project to upgrade your flooring or add built-ins, I can price those options in real time.

• If materials come in under budget, that savings goes back to you, not back into the builder’s pocket.

• If something unexpected comes up on site (say, groundwater in a footing trench or a weather delay), I walk you through the costs and solutions before taking action.

  
  

It’s not about handing over a blank check, it’s about building your home together, with shared information and mutual trust.

A Look Inside the Numbers

I get it: “cost-plus” can sound vague if you haven’t seen it in action. So here’s how I break it down on a typical project:

1. Direct Costs: This is the bulk of the budget - the materials, labor, equipment, and trades that go into building your home. Every invoice, receipt, and time-sheet is documented and shared with you as part of my open-book accounting. I typically bill every two weeks to allow for even more flexibility.

These costs include:

• Lumber, siding, windows, roofing

• Subcontractor invoices (electrician, plumber, HVAC)

• Site work and excavation

• Rentals, dumpsters, and equipment

• Permits and inspections

• Specialty finishes or custom features

  
  

I manage and track all of this through detailed accounting so you can see exactly what’s being spent.

2. Builder’s Management Fee: This is the “plus” - my compensation for managing your project. I use a tiered-fee structure based on the size and complexity of the build. This avoids surprises and ensures alignment from day one. It covers:

• Project management and scheduling

• Client communication and coordination

• Trade supervision and quality control

• Insurance, licenses, warranties, and admin overhead

• Daily site presence and problem-solving

  
  

My management fee is separate and transparent - you know exactly what you’re paying for, and why.

One of the biggest concerns homeowners have with a cost-plus pricing structure is, “How are we keeping things from getting out of hand?”

And that’s a fair question! And one we answer with structure, communication, and systems.

Before we ever swing a hammer, I build out a detailed preliminary estimate during Pre-Construction, based on the design and scope you bring to the table. This serves as a working budget, helping you understand the range of costs for each major phase of the build.

A sample page of our Pre-Construction Agreement, a vital part of the way we price and build custom homes.

Then, I track expenses against that budget as the job progresses, providing regular updates and full access to your project’s financials. Any time something changes we walk you through the cost implications, timeline adjustments, and options before moving forward.

In short: you're never going in blind, and you’re never stuck making decisions without context.

Is Cost-Plus Right for You?

If you're building a highly customized home, cost-plus is almost always the better fit. It allows you to stay agile, adjust priorities, and have full visibility into the process.

It’s also a structure that works best with trust and collaboration. You’re choosing a builder not just for their hammer-and-nails skills, but for their integrity, communication style, and commitment to doing right by you. That’s a responsibility I take seriously, and one that I believe this contract structure supports.

Clarity Builds Confidence

At Unshakeable Custom Homes, I use cost-plus because it reflects the way I prefer to work: openly, collaboratively, and with total transparency. When I say I want to be your partner, not just your contractor, this is what I mean.

It’s your home. You should know where every dollar goes. And you should have the freedom to build it your way, with a team that helps you make informed, confident choices along the way.

If you have questions about how cost-plus might work for your project — or if you just want to see a sample budget and learn more — we’re always happy to talk. Fill out the form here or get in contact with me for a complimentary consultation.