# Lump-sum bid

*Also called: fixed price, stipulated sum, fixed-price contract.*

**Definition.** A lump-sum bid is a single fixed price for the entire defined scope, regardless of what the work actually costs the contractor to perform. The contractor carries the risk of their own estimate being wrong.

Lump sum is the default for most residential and small commercial property work, and it is the right structure when the scope is genuinely well defined.

Its weakness is that a lump sum is only as good as the scope it prices. Where the scope is vague, the contractor either pads the number to cover the ambiguity or bids it tight and recovers the difference through change orders.

The alternatives are cost-plus, where you pay actual cost plus a fee, and time-and-materials. Both shift risk to the owner and both require far more oversight.

## Why it matters

People choose lump sum for price certainty, then undermine it with a scope too loose to deliver any. The certainty comes from the scope, not from the contract type.

## Related terms

- [Unit price](https://quotrium.com/glossary/unit-price)
- [Scope of work](https://quotrium.com/glossary/scope-of-work)
- [Change order](https://quotrium.com/glossary/change-order)
- [Allowance](https://quotrium.com/glossary/allowance)

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Source: https://quotrium.com/glossary/lump-sum · Quotrium — Comparable quotes for property work