Fixed price: definition and example
A price that does not change when labour or material costs rise, unless your subcontract says it does.
By Jack Butler-Kettle · Updated
Guidance for England and Wales. Check the contract, amendments and facts that apply to your job.
What it means in practice
Fixed price normally allocates ordinary cost movements to the party carrying out the work, subject to the agreed terms. It does not necessarily exclude adjustments for instructed changes, specified fluctuation provisions or other contractual events. The label alone does not settle every change in price.
Distinguish increased input costs from changed scope. Price rise recovery examines whether a contractual basis supports the increase you are seeking.
Worked example
The facts
A supplier increases the price of insulation after a subcontractor agrees its package price.
What happens
The subcontractor checks for an applicable fluctuation or adjustment clause.
It separately records any later instruction requiring a different specification.
What this shows
A market increase and a specification change may require different analyses, even within the same fixed-price package.