Cost Plus vs Fixed Price Contracts: What’s Best For Your Construction Business? (With Stephen Mallinger)

Fixed price contracts work great for cookie-cutter homes and simple builds. But unique architectural projects demand a different approach.  Award-winning builder Stephen Mellinger shares his proven “cost-plus strategy” that's transformed his high-end residential construction business. In this detailed episode of The Builders Ladder Podcast, Stephen reveals his exact approach to cost-plus contracts, including:  The deposit approach that protects your final payment and maintains a positive cash flow in your building business A practical way to structure project management fees  The powerful alternative to “variations” that maintains better client relationships A transparent invoicing system that builds trust while protecting margins Stephen also shares critical insights on avoiding legal pitfalls, and why quantity surveyors are essential for million-dollar-plus projects. Key moments: 00:02:15 - Types of projects best suited for cost plus00:04:35 - Handling admin and project management fees00:07:55 - How to structure payment claims and frequency00:13:35 - Managing deposits and final payments00:15:35 - How to handle margin transparency00:21:15 - Including contingencies in labour rates00:31:15 - Avoiding legal pitfalls and misrepresentation00:33:15 - The importance of quantity surveyor estimates Whether you're currently handling complex residential projects or considering your first cost-plus contract, this episode provides a practical roadmap for implementation.  Stephen even shares specific strategies for maintaining margins while building trust with premium clients. - Our construction business coaching has helped 2,500+ building companies succeed. Subscribe to The Builder’s Ladder Podcast for weekly, actionable insights — tailored to help you grow a profitable construction business. Follow TPB for more: 👥 FB Group – https://www.facebook.com/groups/professionalbuilder  📸 Instagram – https://www.instagram.com/theprofessionalbuilder 🖥️ Get your business health audit + free resources (including website audit) here – https://www.theprofessionalbuilder.com  🚀 Head to https://tpb.tools/pod-call to book your FREE strategy session.📈 Resources For Builders – https://tpb.tools/resources https://www.facebook.com/groups/TPBmember: https://www.facebook.com/TheProfessionalBuilderSee omnystudio.com/listener for privacy information.