If you solicit bids from several different builders, be sure they are quoting on the same scope and quality of work. Discuss variations in price and beware of any bid that is substantially lower than the others.
There are generally two types of pricing—Time & Materials & a Fixed Price.
Under Time & Material the client pays material, labor, and supervision plus a builder’s fee based upon the complexity of the job. This pricing method is best for those who wish to take responsibility for the risk associated with the estimate based on the estimated prices at the time vs. actual.
Most reputable builders will give you a “fixed price” contract and stand by it. Fixed Price Contracts includes all materials, labor, builder fees, & supervision. The price only changes if the client’s plans or selections go out of the agreed upon specifications. The risk of construction cost variance for time and/or materials shift completely to the builder under this pricing method, which makes it a popular choice for homebuyers. Most homeowners add items onto jobs as their projects progress. A reserve equal to 10 to 20 percent of what you expect to spend is a good amount for unforeseen additions you may want to include once the project begins.