How Do Custom Home Builders Charge in Ontario?

When the market doesn’t deliver, people often turn to a custom home builder to make their homeownership dreams come true.

Custom home builders are in the business of bringing a family’s vision of the ideal house to life. But they are, of course, still a business! They need to make a profit off the build, and homeowners have to budget carefully.

It’s important to know what to expect. Here’s how custom home builders generally charge for their services in Ontario.

How custom home builders charge

There are two main types of building contracts in Ontario: cost-plus and fixed-price contracts.

In a fixed-price contract, you will work with the builder to plan out every detail of your home before the build begins. Everything, from the specific materials to the time allocated to each part of the project, will be set out in the contract. The builder will then estimate how much it will cost to get the job done.

As the name implies, a fixed-price contract is usually set in stone. The builder does their best to give an accurate quote, since they’re the one who will be absorbing any cost in excess to the original contract.

The second option, a cost-plus contract, charges the homeowner for both the actual cost of construction PLUS a builder’s fee. The fee is often a percentage of the cost of construction. How much builders charge can vary widely across different regions of the province, and even between individual builders in the same area.

Both methods come with pros and cons to the homeowner. A cost-plus contract is flexible. If you decide you want to change something while the build is underway, the builder can accommodate you. A fixed-price contract gives you reassurance the builder will stay on-budget, since they want to avoid absorbing any extra costs.

What about prefabricated home builders?

When it comes to prefabricated home builders, a fixed-price contract is usually the way they charge. The prefabricated building process all but eliminates the kind of variables that can drive up costs in a traditional construction project, such as wasted materials and weather delays.

However, this process also allows a prefabricated home builder to accommodate requests for change during the build. This means the homeowner gets the best of both worlds: the flexibility of cost-plus and the reassurance of fixed-price. It’s a win-win.