A fixed price building contract sets out the agreed cost of building your home before construction begins, based on the inclusions, plans, specifications and conditions in your contract. Put simply, it gives you a clear number to work with from the start, rather than leaving you guessing what your build might cost later.
And when you’re making one of the biggest purchases of your life, knowing the number matters.
Fixed price. Sounds simple enough.
“Fixed price” gets thrown around a lot in the building industry.
And if you’ve heard the horror stories about budgets blowing out or surprise costs appearing halfway through a build, you’d be forgiven for being a little sceptical.
The idea itself is pretty simple: the price agreed to in your building contract is locked in for the work and inclusions covered by that contract.
No mystery invoices appearing six weeks in. No discovering something you thought was standard actually costs extra. No budgeting based on a number that was never realistic in the first place.
Because knowing what something costs before you commit shouldn’t be a luxury.
What should be included in a fixed price?
This is where the details matter.
A fixed price is only useful if you know what’s actually included in it.
Before signing, you should have a clear picture of what you’re getting for your money. Depending on your builder and contract, that may cover things like:
- The home design and structural elements
- Site works included in the contract
- Your fixtures and finishes
- Electrical inclusions
- Plumbing inclusions
- Flooring
- Cabinetry and benchtops
- Heating and cooling
- Any upgrades or changes agreed to before signing
- Other items listed in your plans and specifications
The more detail you have upfront, the fewer grey areas there are later.
A low number on a brochure means very little if half the things you expected aren’t actually included.
Fixed price vs. starting price
These two can sound similar. They’re definitely not the same.
A starting price is exactly that: a starting point. The final cost can increase once site requirements, selections, upgrades and other details are added.
A fixed price contract is based on the home, inclusions and agreed scope you’re actually signing up for.
That difference is a pretty important one when you’re working out what you can comfortably afford.
The cheapest-looking number at the beginning isn’t always the cheapest number at the end.
Look out for allowances and provisional sums
Here’s a little building jargon worth knowing.
Some contracts may include allowances or provisional sums for work where the final cost isn’t known yet. Instead of locking in an exact amount, an estimate or allowance is included.
If the actual cost comes in higher, you may need to pay the difference.
That doesn’t automatically make a contract bad, but you should know where these allowances sit and what could cause them to change.
The clearer the contract, the easier it is to understand what’s fixed and what isn’t.
Can a fixed price ever change?
A fixed price doesn’t necessarily mean the contract can never change.
If you decide to make changes after signing, such as adding an upgrade or changing part of the home, that can affect the final price. These changes are generally handled as variations.
There may also be circumstances outlined in your building contract that allow costs to change, so it’s important to understand the terms before you sign.
The key difference is visibility.
You should know what you’re paying for, what could change and why.
What to check before signing a fixed price building contract
Before you put pen to paper, look beyond the words “fixed price”.
Check that:
- Your inclusions are clearly documented
- Your plans match what you’ve agreed to
- Your selections and upgrades are accounted for
- Any allowances or provisional sums are easy to identify
- Site-related costs and assumptions are explained
- You understand what could result in a variation
- Anything discussed with your builder is reflected in the actual contract documents
If something isn’t clear, ask.
There are no silly questions when there are several hundred thousand dollars involved.
The La Vida approach to fixed price
At La Vida Homes, we’re big on knowing what you’re getting into before you get into it.
Building your first home already comes with enough new terminology, decisions and paperwork. Your price shouldn’t feel like another thing you need to decode.
For us, fixed pricing is about clarity upfront, knowing what’s included, what isn’t and where costs could still change before construction begins.
That’s also where our Fixed Site Costs Guarantee comes in for eligible builds. Site costs can be one of the harder parts of a build to predict, so our guarantee is designed to give you more certainty around those costs from the start, subject to the site conditions, engineering requirements and exclusions set out in the terms.
It means fewer unknowns and a much clearer picture of what you’re committing to.
Know the number before you build
A genuine fixed price is about more than having a number printed on a contract.
It’s about certainty.
Take the time to understand what’s included, look for allowances and exclusions, and make sure the home you think you’re buying matches the home documented in your contract.
Because your budget should be going towards your new home – not surprise invoices you never planned for.
Explore La Vida Homes in South Australia and Western Australia and see what building with a little more clarity looks like.
This article provides general information only and isn’t legal or financial advice. Building contracts, inclusions and circumstances vary, so always review your contract carefully and seek independent professional advice where appropriate.
