Glossary · Construction

Builder fee

The builder fee is the builder's compensation, usually expressed as a percentage of hard costs (cost-plus) or as a fixed contract margin (fixed-price).

Typical builder fees on custom homes range from 12% to 25% of hard costs depending on market, scope, and contract type. A higher fee is not automatically worse — it often reflects more project management hours, better trade partners, or stronger warranty coverage.

The fee structure matters more than the percentage. Cost-plus rewards efficiency; fixed-price transfers risk to the builder.

Related terms

See also