Two remodels can have the same drawings, the same finishes, and the same crew — and still feel completely different, because of one line in the contract: how you’re billed. Fixed-price and cost-plus put the financial risk in very different places, and most homeowners don’t learn the difference until the invoices start arriving. Here’s the plain-English breakdown, and why we built our whole model around fixed price.
Fixed-Price vs. Cost-Plus (Quick Take)
| Question | Fixed-Price |
|---|---|
| Do you know the final number? | Yes — before work starts |
| Who carries overrun risk? | The contractor |
| Surprise bills? | No — the price is the price |
| Best for peace of mind? | Yes |
How Cost-Plus Works
In a cost-plus contract, you pay the actual cost of labor and materials plus a contractor’s fee (a percentage or flat markup). The pitch is transparency. The catch: you don’t know the final number until it’s done, and every overrun, inefficiency, or price bump lands on you. When the percentage fee rises with the total, there’s also little built-in incentive to keep costs down. You carry the risk.
How Fixed-Price Works
In a fixed-price contract, the contractor commits to a set price for a defined scope before work begins. You know the number. If materials cost more than expected or a task takes longer, that’s the contractor’s problem, not your bill. The risk shifts to the party who can actually manage it — the builder. The one fair condition: the scope has to be well-defined, which is exactly why design and pricing go together.
Where People Get Surprised
The classic cost-plus story: a project that “started around” one number and finished well above it, with a stack of justified-but-unexpected charges. Nothing improper happened — that’s just how the model distributes risk. Fixed price exists to close that gap. “No surprise bills” isn’t a slogan for us; it’s a description of the contract structure.
What About Real Changes?
Fair question: what if you change your mind, or we open a wall and find a genuine hidden condition? Those are handled through clear, agreed change orders — documented and priced before the work happens, never sprung on you after. The difference from cost-plus is that the baseline is fixed and changes are the exception, not the operating model.
Why Pegasus Is Fixed-Price
We were founded by developers who think in terms of return and certainty, so fixed price was never a question — it’s how you protect a homeowner’s biggest asset. Our design-build process defines the scope tightly enough to stand behind one number, start to finish. See our pricing center to see how we scope a project.
Frequently Asked Questions
In fixed-price, the contractor commits to a set price for a defined scope before work begins, so you know the final number. In cost-plus, you pay actual labor and materials plus a fee, and you don’t know the total until the project is done.
For most homeowners, fixed-price offers more certainty and peace of mind because the contractor carries the overrun risk. Cost-plus shifts that risk to you, since every cost increase or inefficiency lands on your bill.
Yes. With a fixed-price contract, if materials cost more or a task takes longer, that’s the contractor’s responsibility, not your bill. The price is set up front for the defined scope.
Real changes, whether you change your mind or we find a genuine hidden condition, are handled through clear change orders that are documented and priced before the work happens, never sprung on you after.
Because a contractor can only stand behind one price when the work is clearly defined. That’s why design and pricing go together in design-build, so the scope is tight enough to commit to a number.
We were founded by developers who think in terms of certainty and return. Fixed price protects a homeowner’s biggest asset, and our design-build process defines scope tightly enough to stand behind one number start to finish.
Fixed-Price Remodeling Across Chicago
Pegasus Construction builds on fixed-price contracts throughout Chicago and the North Suburbs. Explore remodeling in your neighborhood:
