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Fixed Price Contract

Definition of "Fixed price contract"

Nelson Grassi
  RE/Max Executive

Predetermined price for a contract that will be the same irrespective of the actual costs incurred to complete it. This contract is advantageous to the buyer because he knows beforehand what price will be. If actual costs are much less than the estimated costs used as a basis to set the price, greater profits will arise. Therefore, careful consideration must be given to costs before contractual prices are established.

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