Custom Home Pricing
How Custom Home Pricing Actually Works
Most people don’t realize there are fundamentally different ways a builder can charge for a custom home — and the structure matters enormously for your interests. Here’s an honest breakdown of each, and why we charge the way we do.
The Three Common Structures
Not All Builder Contracts Are Created Equal
The pricing structure of a building contract determines whose interests are best served when costs go up — or down. Understanding the difference before you sign anything is one of the most important things a custom home client can do.
Option 01
Fixed Price
The builder and client agree on a fixed price for the home up front. The builder’s costs, overhead, and profit are all bundled into one number. If costs go up, the builder absorbs it. If costs go down, the builder keeps the savings.
- +Predictable total for the client
- +Works well for production homes built many times
- −Client has no visibility into where money is going
- −Creates adversarial dynamic — client wants more, builder wants to provide less
- −Often results in client shopping for the lowest bid — which usually means the builder who made the biggest estimating mistake
- −Poor fit for a truly custom home with many unknowns
Option 02
Cost Plus Percentage
The client pays the cost of construction plus a percentage of that cost as the builder’s fee. Better than fixed price for custom homes — but the builder earns more when costs are higher, which creates a conflict of interest.
- +More transparent than fixed price
- +Client assumes less risk from estimating errors
- −Builder has a financial incentive to let costs run higher
- −Client may wonder if the builder is working for them or against them
- −The relationship can become adversarial over cost decisions
How We Work
Option 03
Cost Plus Flat Fee
The client pays the actual cost of construction plus a flat fee that covers the builder’s profit and overhead. The fee is set in advance and does not increase if construction costs go up — so the builder has no financial incentive to inflate costs.
- +Full alignment of interests — builder and client both benefit from keeping costs accurate
- +Complete transparency — all costs are visible to the client
- +No incentive for the builder to increase costs
- +Works like a team — not an adversarial relationship
- +Best value for the client on a custom home
- −Requires a builder committed to genuine transparency
Our Fee Structure
What We Charge — And Why
Our builder fee is typically close to 15% of the final construction cost of your home — not including the land. This flat fee covers our profit and overhead. It is agreed upon before construction begins and does not change if material costs rise or if your project runs longer than expected.
Because our fee is flat, we have no financial incentive to let costs run higher. If we can find a better price from a subcontractor, we do — and that savings goes directly to you, not to us.
- Set before construction beginsYou know what our fee is before you commit to building. No surprises.
- Does not increase if costs increaseIf lumber prices rise mid-build, our fee doesn’t change. Cost increases affect the construction total — not our margin.
- Applied to construction cost onlyLand is purchased separately and is not included in the fee calculation.
- Full documentation shared with youEvery quote, every invoice, every estimate update — in a shared Google Drive folder throughout the project.
~15%
Flat builder fee
of construction cost
This covers our profit and overhead. It is agreed upon before construction begins and does not increase if costs increase. Land cost is excluded from the calculation.
How This Compares
Production Builder vs. Tory Dutton Construction
The typical production builder bundles overhead, profit, and sales commission into the purchase price of the home. That total is often around 25% of the final cost — including the lot. Here’s how that compares to building with us.
Typical Production Builder
What’s hidden in their price
When you buy from a production builder, you typically have no visibility into how your purchase price breaks down. A rough estimate of where that money goes:
These figures are approximate and based on industry averages. Individual builders vary. Includes lot cost.
Tory Dutton Construction
What you see with us
Every dollar of construction cost is documented and shared with you. Our fee is separate, stated clearly, and does not change. There is no sales commission.
Land is purchased separately and excluded from this calculation. Construction cost excludes lot.
Every number is shared with you — always.
We set up a shared Google Drive folder for every client containing all quotes, estimate updates, and invoices throughout the project. You see what we see. That’s not standard practice in this industry. For us, it’s the only way we know how to work.
Ready to See the Numbers?
Start with a no-obligation rough estimate.
Tell us about your land and your vision. We’ll put together a detailed rough estimate — and walk you through every line of it at our home in Huntsville before you commit to anything.