Set Your Roofing Contract Price: Cost Plus Fixed Price Contracts
Is it advisable to take on a construction job where you set your roofing contract price at a fixed fee? You may have had to choose between this charging method and others such as fixed price contracts. Cost plus fixed price contracts offer advantages such as an assured lump sum on completion even in the event of a downsized budget.
Read on to discover the advantages this type of contract will give you, as a roofing contractor.
How Does A Cost Plus Fixed Price Contract Work?
A project owner wants work done. They only have an estimate on the budget. They have a design but it might change. They are ready to pay your direct and indirect expenses related to completing the project. In addition, the project owner pays you a fixed amount as your profit.
The expenses to be reimbursed and the fixed amount to be paid to you is pre-agreed and noted in a legally binding contract. This is the cost plus fixed price contract in a nutshell.
When Is A Cost Plus Fixed Price Contract Preferable?
A cost plus fixed price contract serves you well when:
- Complete project designs are unavailable.
- The project provider only has an approximate budget
What Are The Advantages Of A Cost Plus Fixed Price Contract?
When you set your roofing contract price to be paid as a cost plus fixed amount, you are assured you will be paid a fixed amount even if the project owner’s budget decreases. Your roofing contract should outline measures to be taken if the fixed amount owed to you is unfulfilled.
Because the project owner pays construction costs, you are at greater liberty to select quality materials.
How To Set Your Roofing Contract Price For A Cost Plus Fixed Price Contract
The project owner reimburses expenses on materials and overheads. With a cost plus fixed price contract, you negotiate your fee which is also your profit. How strongly you negotiate will directly impact your profit on the job. Your proposed fixed fee should be in line with current market value estimates for the job.
When setting your contractor fee, consider the project scope and duration. The fee should also take into consideration additional factors such as market trends and the economy. For a roofing contractor, even a simple factor like the season influences your charges. Weather conditions such as rain and snow can make work conditions more difficult.
Highlight Your Credentials
When you set your roofing contract price, highlight personal credentials such as your positive track record of completing projects on time, recommendations, certifications, and industry recognition attained.
While the aim is to make a reasonable profit, refrain from charging exorbitant fees. High fees may put clients off. The recommendation is to charge fairly but charge what you are worth.
Roofers Liability Coverage For A Cost Plus Fixed Price Contract
Project owners generally prefer contractors with Liability Cover because they are protected in case of accidents or mishaps. A Contractor Liability Cover is a requirement by law in most states. Liability Cover offers a stronger appeal to potential clients. Furthermore, it affords your roofing contractor business protection in the event of accidents. Talk to us today to learn more about how to get a suitable liability insurance cover for your roofing construction business. Call 888 676 0923 now.