Cost Plus Construction: Why Builders Are Ditching Fixed Pricing (and How It Impacts You)

We’re all striving for a level of mastery in our chosen trades, that sweet spot where craft meets entrepreneurship. It's the Paige-Rise mechanism in action – the relentless pursuit of skill leading to a breakthrough. And sometimes, that breakthrough isn’t just about perfecting a dovetail joint or a perfectly plumb wall. It's about reimagining the business of building itself. The Perkins Brothers, a rising force within the construction trades, are doing just that.

They've seen the pitfalls of traditional fixed-price contracts firsthand, and they’re advocating for a system that many modern builders are adopting: Cost Plus pricing. Let's dive into why this shift is happening and what it means for you – whether you're a Rogue Schooler considering a build, a budding Apprentice Journeyman Master Founder, or simply curious about the inner workings of construction.

The core of the issue lies in the unpredictability of construction. Fixed pricing, while seemingly straightforward, demands a level of precision that's often impossible to achieve upfront. Think about it: material costs fluctuate, weather throws curveballs, and unexpected site conditions emerge. A seemingly simple flooring project can turn into a ten-day ordeal, eating into the builder's profit margin and potentially impacting the quality of work.

Erik and Jamie Perkins explain that their initial attempts at fixed pricing involved a complex, spreadsheet-driven approach – a “crazy spreadsheet” as they put it – to account for every conceivable cost. But even the most meticulous planning can't account for everything. Cost Plus pricing, on the other hand, offers a more transparent and equitable solution. Essentially, it means the client pays the actual cost of materials and labor, plus a fixed percentage – in the Perkins Brothers’ case, 20% – for the builder's overhead and profit.

The Benefits of Cost Plus

• Transparency: Clients see exactly what they’re paying for – no hidden markups or unexpected surprises.
• Reduced Risk for Builders: Builders aren't forced to absorb losses due to unforeseen delays or cost increases.
• Higher Quality: With less pressure to cut corners, builders can focus on delivering exceptional craftsmanship.
• More Realistic Expectations: Clients understand that costs can fluctuate and are more willing to adjust plans accordingly.

The Perkins Brothers emphasize that Cost Plus pricing requires a high level of trust between the builder and the client. It’s a system that works best when both parties are committed to open communication and collaboration. As they put it, “you got to trust your Builder.” If you suspect your builder is going to cut corners or inflate costs, Cost Plus isn’t the right choice.

They also mention that the current average cost per square foot in their area is around $250 – a number that reflects current market conditions and doesn’t include extravagant finishes. This figure serves as a benchmark, but it’s crucial to remember that every project is unique.

Beyond the Numbers: The Entrepreneurial Spirit

The Perkins Brothers’ journey is a testament to the power of organic growth within the Trade School umbrella. Starting young working for their father, they've built a successful business while sharing their knowledge and expertise through YouTube. They embody the Apprentice Journeyman Master Founder archetype, demonstrating that a passion for craftsmanship and a willingness to innovate can lead to remarkable results. Their willingness to share their business practices, even the less glamorous aspects, is a valuable contribution to the Rogue Tradesman community.

Consider this a lesson for any Stripling Tradesman looking to rise to the top – sometimes the greatest innovations come from challenging conventional wisdom and embracing new approaches. Cost Plus construction isn’t just a pricing strategy; it’s a reflection of a changing industry, one that values transparency, trust, and the relentless pursuit of excellence.