Contractors use a number of methods to set the cost of the project. Each one is suited to a particular type of work. On larger projects, there may be one contract between the owner and the person who is doing the construction (the contractor), and a second (separate) contract between the owner and the person who is doing the design work (an architect or designer).

A Fixed Price Contract, also called a Lump Sum Contract, sets out the total price for the work, including all labour, materials, subtrades, equipment rentals and so forth. Taxes are either included in this price or additional to it; this should be clearly stated. Fixed-price contracts are suited to small repair or renovation jobs, or those projects that are relatively straightforward and easy to plan. Any changes or adjustments to a fixed-price contract require a written Change Order signed by both parties.

A Cost-Plus Contract is based on the cost actually paid for labour, subcontracted services, materials and other direct expenses, plus a fee to cover the contractor's time managing and coordinating the sub-trades, materials and inspections needed to complete the project. The fee can be either a fixed amount or a percentage of the costs. A cost-plus contract is often used in larger renovation projects when the exact extent of the work to be done cannot be accurately determined in advance. The project budget set out in the contract should provide estimated costs for major elements of the work. To ensure that the project costs are kept under control, a maximum budget can also be set out in the contract.

Design-Build Contracts are a variation on either fixed price contracts or cost-plus contracts. The distinguishing feature of a design-build contract is that instead of the owner signing one contract to design the home, and a separate contract to build it, the whole project is covered in a single document: one firm undertakes to do both design and construction. This approach is more common with custom new home construction and large-scale renovation projects. For instance, architects often provide overall management for a custom home project, doing the design work themselves and then hiring contractors to carry out the construction. Most often, design-build management fees are calculated as a percentage of all costs and billed separately. However, even if the design-build contract is presented as a "single package deal", the owner should make absolutely sure that they are able to approve the design before work begins on construction.

A Unit Price Contract means that the invoice will be based neither on a fixed lump sum, nor on cost-plus, but instead at a given rate per unit of measurement. For example, backfill or decorative stone might be charged on the basis of a given rate per cubic meter or by weight.