Fixed Price vs Cost Plus Builder Contracts (2026 UK Guide)
UK extension builders quote in two fundamentally different ways: fixed price (you agree one number for the whole job) or cost plus (you pay materials + labour at cost + a margin, typically 12–20%). Fixed price gives you certainty but bakes in a 10–18% “risk premium” — the builder's protection against unknown ground conditions, material price moves, and scope creep. Cost plus is leaner and more transparent but transfers cost risk to you: budget overruns hit your wallet, not the builder's. This guide shows when each model wins, the contract clauses to insist on, and a real £68k Bristol extension priced both ways.
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Fixed price vs cost plus — which is right for you?
- Choose fixed price if you want budget certainty, the design and spec are fully resolved before signing, and you'd rather pay a 10–18% premium than face overrun risk.
- Choose cost plus if you trust the builder, your spec will evolve (heritage, period property, design-led project), and you can absorb 10–25% overruns without it derailing the project.
- Hybrid “target cost” models (most JCT IC 2016/24 contracts) split overrun pain and gain between you and the builder — typically the best middle ground above £80k project value.
Fixed Price vs Cost Plus — The Eight Differences That Matter
Worked example (illustrative): Bristol Single-Storey Rear Extension Priced Both Ways
25m² single-storey rear extension, mid-range spec. Same builder, same brief, same March 2026 start. Here's how each contract played out.
Fixed Price quote
- Builder absorbed a £2,800 steel-price rise (good for owner)
- Owner requested an island upgrade mid-build — £6,200 variation order
- Final cost: £84,600 (variation only)
Cost Plus quote
- Actual material cost ran £71,200 (£3,200 over due to steel rise)
- Owner upgraded kitchen island mid-build at cost — no premium
- Final cost: £86,900 (£75,500 actual × 1.15)
Verdict: Without the kitchen upgrade, cost plus would have come in at £82,000 — saving £2,600 vs fixed. With it, both landed within 3% of each other. The decision came down to risk appetite: fixed price felt safer; cost plus felt more honest.
Common Questions
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