Driveway Cost Plus Contract: Transparent Pricing Model

What a Driveway Cost Plus Contract Really Means

A Driveway Cost Plus Contract is the most transparent way to price a residential driveway project. Instead of a single lump-sum bid that hides every line item, you see the exact cost of labor, materials, permits, and equipment—then add a pre-agreed contractor fee (usually 10–20 %). Think of it as an open-book partnership: the homeowner pays only what the job actually costs, and the contractor is guaranteed a fair margin.

Homeowners who choose this model typically save 8–15 % compared with fixed-price bids, while gaining the freedom to upgrade or downgrade materials as the project evolves. Below, we break down every moving part so you can decide if a Driveway Cost Plus Contract is right for your next concrete, asphalt, paver, or gravel driveway.

Top 6 Benefits of a Driveway Cost Plus Contract

1. Full Cost Transparency

Every invoice shows supplier receipts, daily labor logs, and equipment rental agreements. You’ll never wonder where your money went.

2. Real-Time Change Orders Without Sticker Shock

Want to widen the apron or add LED edge lighting? Your contractor simply passes the supplier’s invoice to you at cost, plus the agreed fee—no 300 % markup typical of fixed bids.

3. Lower Up-Front Risk for the Contractor

Because profit is guaranteed by the fee percentage, contractors don’t pad estimates for “what-if” scenarios. That usually translates to lower base costs for you.

4. Shared Savings

If asphalt prices drop mid-project, you pocket the savings—not the contractor.

5. Faster Project Start

Without the need for exhaustive contingency math, contracts can be signed and crews mobilized in days, not weeks.

6. Better Material Quality

Contractors are motivated to recommend the best-value products, not the ones with the biggest built-in markup.

How a Driveway Cost Plus Contract Works—Step by Step

Step 1: Pre-Construction Audit

Your contractor surveys soil conditions, drainage, utility lines, and existing pavement thickness. A baseline “allowance” is set for each cost bucket (e.g., $4.20 per sq ft for 3-inch asphalt, $65 per ton of ¾-inch crushed stone).

Step 2: Fee Negotiation

You agree on the contractor’s fee—usually 12–18 % for driveways under 2,000 sq ft, or as low as 8 % for larger projects. This fee is fixed; it never changes even if material costs spike.

Step 3: Written Maximum Price (Optional Cap)

Many homeowners add a “not-to-exceed” clause, capping total cost at, say, 110 % of the initial estimate. This hybrid model keeps transparency while controlling budget risk.

Step 4: Weekly Invoicing & Receipts

You receive scanned invoices from the quarry, ready-mix plant, equipment rental yard, and daily time sheets. Payment is due within 7 days, keeping cash flow smooth and prices low.

Step 5: Final True-Up

After the last seal-coat dries, all costs are tallied, the fixed fee is applied, and you get a concise summary. Any unused allowance is credited back to you.

Typical Cost Breakdown for a 600 sq ft Driveway

Below is an actual recent Driveway Cost Plus Contract in Columbus, OH. Numbers will vary by region, but the format stays the same.

• Remove & haul 4 in. concrete: 12 tons @ $22/ton = $264
• Geotextile fabric: 700 sq ft @ $0.18 = $126
• Aggregate base, 6 in.: 11 tons @ $19 = $209
• Asphalt, 3 in. compacted: 18 tons @ $78 = $1,404
• Edge milling & tack coat = $180
• Equipment (skid-steer, paver, roller) 2 days @ $950 = $1,900
• Labor, 3 crew, 2 days @ $1,200 = $2,400
• Permit & inspection = $125
• Subtotal Direct Costs = $5,608
• Contractor Fee, 15 % = $841
• Total Homeowner Cost = $6,449

Comparable fixed-price bids ranged from $7,100 to $7,800—saving the homeowner $651–$1,351.

Cost Plus vs. Fixed Price vs. Time & Materials

Fixed-Price Bid

Single bottom-line number. Pros: budget certainty. Cons: hidden markups, change-order battles, contractor may cut corners to protect margin.

Time & Materials (T&M)

You pay hourly for labor and get material invoices, but no spending cap or incentive for efficiency. Risk of open-ended budget.

Driveway Cost Plus Contract

Combines transparency of T&M with the spending discipline of a cap. Best of both worlds for most residential driveways.

How to Choose the Right Contractor for a Cost Plus Deal

Check Their Bookkeeping System

Ask for a sample weekly invoice. If it looks like a napkin doodle, walk away. Professional contractors use cloud-based job-costing software (e.g., Buildertrend, JobTread) that exports PDF bundles.

Verify Supplier Relationships

Call the local ready-mix plant or asphalt supplier to confirm the contractor has an active account in good standing. This prevents fake invoices.

Ask for References on Past Cost Plus Jobs

Speak to at least two homeowners who completed similar projects under cost-plus terms. Did final price stay within 5 % of the first estimate?

Insist on a Written Maximum Price Clause

Even the most honest contractor can’t predict soil surprises. A 10–15 % cap protects you while preserving transparency.

Review the Fee Structure

Fees below 8 % may signal desperation; fees above 20 % border on gouging. Sweet spot for driveways: 10–18 %.

Common Pitfalls & How to Avoid Them

Pitfall 1: “Allowance Creep”

Solution: Require contractor to flag any line item that exceeds allowance by more than 5 % before spending.

Pitfall 2: Double Billing

Solution: Cross-check equipment rental invoices with on-site photos taken by your own phone. Timestamped pictures don’t lie.

Pitfall 3: Unnecessary Upgrades

Solution: Put all upgrades in writing with cost impact and payback analysis. Sleep on it before approving.

Pitfall 4: Late Invoices

Solution: Contract should state invoices older than 14 days are void unless pre-approved in writing.

Negotiation Checklist Before You Sign

1. Define exact scope: length, width, thickness, finish, drainage.
2. Set start and completion dates with daily penalties for delays.
3. Spell out fee percentage and confirm it covers overhead and profit only—no hidden margins.
4. Insert a not-to-exceed cap.
5. Require lien waivers from every supplier and sub before final payment.
6. Retain 10 % final payment until 30-day post-completion inspection passes.

Maintenance Savings Under Cost Plus

Because you see real material prices, you can pre-purchase sealant, crack filler, or extra pavers at contractor rates. One homeowner spent $238 on commercial-grade sealant in the same invoice as the main job—enough for five years of maintenance and 60 % off retail.

Frequently Asked Questions