What Are Fixed Price Contracts In New Home Builds
Monday 28 September 2026
When you start comparing builders, one of the first things you will hear is the term fixed price contract. It sounds reassuring, and in most cases it is. But many buyers sign a building contract without fully understanding what is actually locked in and what is not. Knowing the difference before you sign puts you in a much stronger position.
What Is a Fixed Price Contract?
A fixed price contract is a building agreement where the total price of your home is agreed upfront before construction begins. The builder takes on the risk of cost increases during the build. If material prices rise or labour costs change, that is the builder's responsibility to absorb, not yours.
This is the standard contract structure used by volume builders like Eight Homes, and it exists specifically to give buyers financial certainty from the day they sign.
How It Differs From a Cost Plus Contract
With a cost plus contract, the builder charges their actual construction costs plus an agreed margin. The final price is only known once the build is complete. If costs run higher than expected during construction, your bill increases accordingly. There is no fixed total, which means your budget is exposed throughout the entire build.
A fixed price contract removes that exposure. The number on the contract is the number you plan your finances around.
What Does a Fixed Price Contract Cover?
A fixed price contract typically locks in three things:
The base house price and standard inclusions, meaning the fittings, finishes and features that come with your chosen design as part of the agreed price
Site costs, where these have been assessed and fixed upfront following a site inspection and soil test
Statutory fees such as building permits and council fees, depending on how your contract is structured
Standard inclusions vary between builders, so it is worth reviewing the inclusions schedule carefully rather than assuming everything you see in a display home is included at the base price.
Lirello Interior
Thanne Interior
Evoke Bathroom Interior
What Is Not Covered by a Fixed Price Contract?
This is where buyers are most commonly caught off guard. A fixed price contract does not mean the final price can never change. There are three areas where the number can move.
Prime Cost Items
Prime cost items are allowances for specific fixtures or fittings that have not been selected at the time of signing. Common examples include tapware, light fittings and appliances where you want to choose the specific product yourself.
A dollar allowance is written into the contract for each prime cost item. If your final selection costs more than that allowance, you pay the difference. If it costs less, the saving comes back to you. The key is checking whether the allowances written into your contract are realistic before you sign.
Provisional Sums
Provisional sums are estimates for work where the exact scope or cost cannot be determined at contract stage. Common examples include site-specific earthworks and connections to services. Once the work is carried out, the actual cost replaces the estimate and the contract price adjusts accordingly.
They exist because some costs genuinely depend on conditions that are not fully known until construction begins. A good builder will explain what provisional sums are included and what conditions might cause them to vary.
Upgrades and Contract Variations
Any changes you choose to make after signing, such as upgrading to a premium inclusion or adjusting a floor plan detail, are priced separately and added to your contract total. These are buyer-driven changes, so they sit outside the fixed price structure by definition.
Jardene Interior
Saara Interior
What to Look For Before Signing
Review Inclusions and Exclusions Carefully
Read the inclusions schedule in detail before you sign. Common items that buyers assume are included but are not always covered include landscaping, driveway, fencing and window furnishings. If it is not listed, ask.
Check Allowance Amounts
Look at the prime cost item allowances and provisional sum estimates in your contract. Check them against realistic market rates rather than taking them at face value. A low allowance is effectively a shortfall built into your contract before construction has started.
Ask the Right Questions
Before you sign, these are worth asking your builder directly:
What in this contract is not fixed?
What are the prime cost and provisional sum allowances based on?
How are variations assessed and priced if costs exceed allowances?
Are site costs fixed or subject to change after soil testing?
Building Your Dream Home With Confidence
A genuine fixed price contract gives you a solid foundation to borrow against, budget around and plan your life from. Eight Homes builds on a fixed price basis, so you know exactly what you are committing to before construction begins. Taking the time to understand your contract before you sign means fewer surprises and a much smoother build.
What is a fixed price contract in a new home build?
A fixed price contract is a building agreement where the total price of your home is agreed upfront. The builder cannot increase the price due to rising material or labour costs during construction.
What is included in a fixed price building contract?
A fixed price contract typically covers the base house price, standard inclusions, fixed site costs and statutory fees. Exactly what is included varies between builders, so reviewing the inclusions schedule carefully before signing is important.
What is the difference between a fixed price and cost plus contract?
A fixed price contract locks in your total build cost upfront. A cost plus contract charges actual construction costs plus a builder margin, meaning the final price is only known once the build is complete.
What are prime cost items and provisional sums?
Prime cost items are allowances for fixtures or fittings not yet selected at contract stage. Provisional sums are estimates for work where the full scope is not yet known. Both can vary from the original allowance and affect your final contract price.
What should I look out for in a fixed price building contract?
Review prime cost item allowances and provisional sum estimates carefully. Check that inclusions are clearly defined and exclusions are listed. Ask your builder how variations are priced and under what circumstances the contract price can change.
Can a builder change the price on a fixed price contract?
Generally no. A fixed price contract protects you from builder-driven cost increases. However, the final price can change if you select items above prime cost allowances, provisional sums vary from estimates, or you request contract variations after signing.