When building your dream home or remodelling your existing house, hiring a custom home builder is a great choice. They can help design and build your dream housekeeping in mind all your needs and preferences.

But before you proceed, you want to know how much this project will cost you. When buying a new home, the prices charged by custom builders may seem slightly higher as compared to production home builders. While production homes are slightly cheaper, they lack a lot of features, customizations and uniqueness that custom homes provide.

So we consulted 5F custom home builders from La Vernia, Tx to understand the pricing of such custom home building contracts to help you prepare your finances accordingly.

How Do Custom Home Builders Charge

Since custom home builders build a house based on your budget and specifications, the price range can vary wildly. There various factors that affect the overall cost of building the house such as:

  • Size of house
  • Layout plan
  • Type of Materials Used
  • Labour cost
  • Additional customizations
The fancier your house, the higher will be the cost and vice-versa. So you have to consult with a custom home builder to get an estimate of their charges based on the vision you have for your home. Usually, custom home builders use 2 ways to charge their customers- either a fixed-price contract or a cost-plus contract.

1. Fixed- Price Pricing.

In this method, the home builders will charge you a fixed amount. This amount is decided based on the estimated cost of building the house plus their own profit margin.

A contractor plans out all the details and gets estimates for material and labour cost to give a quotation. This amount which is pre-decided by the contractor is the only amount you pay unless you decide to upgrade or make changes to the existing design.

The contractor takes responsibility for any mistakes on his or his subcontractor’s part. So if there is a hike in labour or material cost once construction begins, the contractor has to pay for it from his own profit margin.

As a homeowner, you are at an advantage since the contractor is motivated to complete the job on time as any delay would affect his profits. You can also plan your finances accordingly since there won’t be any surprise costs later on.

On other hand, you may end up paying a slightly larger amount since the contractor has to build in some contingency fund in case of unforeseen events.

2. Cost Plus Pricing

When it is difficult to predict the exact price of construction, the contractors opt for a cost-plus pricing model. In this contract, you pay for the actual cost of construction plus an additional amount on top as a fee to the contractor.

The fee charged is usually between 10-25% of the construction cost and can be negotiated. Unlike the fixed-price model, you have to pay for any hike in material and labour cost. You also have to pay for any mistakes on the contractor's part.

Most contractors choose this pricing model when it is hard to determine exact prices beforehand. But as a homeowner, you are at disadvantage here as there is ambiguity over the final cost so you cannot plan your finances properly. In case of unforeseen events, there may be some surprise costs involved. But such contracts are also priced more competitively as contractors operate on low-risk. This may be advantageous if you are on a budget and ready to bear the risk of unexpected costs.


Both pricing models have their pros and cons for the homeowner and contractors. While fixed priced contract benefits the homeowners more, cost-plus contracts are better suited for contractors.

So it is best to choose a custom home builder you can trust and negotiate all the terms and conditions before the construction begins. If you are looking for custom home builders or kitchen remodeling contractors in La Vernia, Texas, get in touch with 5F Contracting. They provide great attention to all your needs and will help you build your dream house.