Contract Glossary
Fixed-Price Contract
Definition
A contract where the total price is set upfront and doesn't change regardless of actual costs incurred. The contractor takes on the risk of cost overruns; the client gets price certainty.
In Practice
If you're hiring someone to build you a website for $5,000, that's a fixed-price deal — even if they end up spending twice the hours they estimated. These work best when the scope is well-defined. Vague requirements + fixed price = guaranteed conflict. Make sure your scope of work is airtight before agreeing to a fixed price.
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Frequently asked questions about fixed-price contract
In a fixed-price contract, you pay one set amount no matter what. In a cost-plus contract, you pay the actual costs plus a markup or fee. Fixed-price gives you budget certainty but often costs more upfront because the contractor builds in a risk buffer.
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Create your contractThis content is for informational purposes only and does not constitute legal advice. For contracts with significant financial or legal implications, review by a qualified attorney is recommended.