What is a Fixed Price Contract?

This is also referred to as a firm fixed price contract or a lump sum contract. Here the buyer and seller agree in advance to a fixed and set fee for the project. This is then put down in writing in the contract. Generally this is better for the buyer (less risk) because no matter how long the project takes, the buyer will only pay the agree-upon amount. This means that if the work winds up taking a lot longer than planned, the seller is at a great risk; because time is money, and the seller will lose if even if they receive the full payment.