Choosing the Contract Type - Fee System

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So cost plus fee is a situation where instead of saying, "Alright, we're gonna do this project for you for $100,000." What you're gonna say is, "Look, we're gonna do it, "and we're gonna say we have four different levels "of payout that we do." We have our interns, we've got our designers, we've got our architects, we've got our principles, and each of those is gonna have a cost associated with them and we're gonna do this as fast as we sort of reasonably can but we're not gonna give you a total amount of money, we're just gonna give you a dollar amount per hour that's being worked on something and multiply that by the number of hours and then at the end we will have what the total cost is. So this is a situation where you don't know what the fee will be until the end because you have to go through and figure out how many hours it took and then as that is all being done it's not just the straight costs of how much it costs for that particular employee. It's also the overhead costs and it's also a little bit of extra profit or fee that's added onto the top and it's the cost plus fee part.

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