Insights & Inspiration
Discover thoughtful design ideas, renovation tips, and stories that transform how people live in their spaces. Our blog is where craftsmanship meets creativity, just like in every Spillman Homes project.
Understanding Custom Home Pricing Models
Why the Structure Matters More Than the Number
One of the biggest mistakes homeowners make early in the custom home process is focusing on the price instead of how that price is created.
Two custom home builders can give you two very different numbers — and neither one is lying.
What most homeowners don’t realize is that the structure behind the price is often more important than the number itself. The way a custom home is priced determines how
decisions are made, when costs are locked in, and how much uncertainty remains throughout the build.
In many cases, the price you see on the front end is not the price you experience on the back end.
That’s because pricing models don’t just describe what you pay — they shape the entire process:
How much planning happens up front
How many decisions are deferred
How often costs are revisited
And how exposed you are to budget drift over time
Understanding how a builder arrives at their price is critical, because that structure largely determines where the project ultimately lands financially.
The goal isn’t to chase the lowest starting number.
It’s to choose the pricing model that produces the most accurate, reliable number from start to finish.
Cost-Plus Pricing (Open Book)
Under a cost-plus contract, the homeowner pays the actual cost of construction plus a builder fee.
This model works best for extremely large or complex custom homes where the client wants to evaluate every option in real time — what we call the “wedding gown” approach.
That level of iteration works for the top 5% of buyers with significant financial flexibility. For most homeowners, however, cost-plus pricing delays decisions, creates gray pricing
zones, and forces builders into forensic accounting roles.
This ambiguity is one reason cost-plus contracts are more dispute-prone than fixed-price agreements.
Time & Materials (T&M)
Time & Materials pricing bills actual labor hours plus materials used. While useful for exploratory or repair work, it is rarely appropriate for full custom homes because it lacks
budget guardrails and predictability.
Fixed-Price (Lump Sum) Contracts
Fixed-price contracts establish a single total cost for a clearly defined scope. They work best when planning and selections are done upfront. Problems arise when scopes are vague and
allowances are excessive.
Fixed Price with Allowances
Allowances are placeholders, not prices.
They become a problem when builders fail to dig deeper into appliance levels, configurations, and expectations. A slide-in range versus a double oven and cooktop can
dramatically change cost and labor.
Responsible allowances anchor expectations without eliminating flexibility.
Contingencies: Fairness, Not Guesswork
Contingencies are commonly used for unknowns like dirt work.
Rather than guessing, we create educated estimates and clearly label them as contingencies so final costs reflect reality — not surprises.
Cost-Plus with a Guaranteed Maximum Price (GMP)
A GMP only works if assumptions are solid.
Vague scopes and unrealistic allowances undermine its effectiveness and simply delay pricing conflicts.
Our Philosophy
Numbers matter — a lot.
What doesn’t matter is an artificially low starting number that feels good early but falls apart as decisions are made.
What matters is the real number — the one that reflects your actual home, your real selections, and the true cost to build it well.
That real number is achieved through due diligence:
Making key decisions earlier
Reducing unknowns before construction begins
Using allowances and contingencies responsibly, not casually
When the pricing structure is sound, the number becomes reliable.
That reliability allows homeowners to enjoy the process instead of worrying about constant budget shifts — and it allows us to focus on what you hired us to do: build your home the right way.
How to Choose the Right Custom Home Builder
Part 2 of the Custom Home Building Series: Before You Buy Land or Draw Plans
How to Choose the Right Custom Home Builder
Part 2 of the Custom Home Building Series: Before You Buy Land or Draw Plans
Most people think the first step in building a custom home is buying land or drawing plans.
That’s where the confusion starts.
Homeowners often find themselves asking:
Should we buy the lot first?
Should we design the house first?
How do we know if this land will even work?
Are we about to make an expensive mistake before we even begin?
The truth is, the first step isn’t land or plans at all.
The first step is choosing the right custom home builder.
Once you select the right builder, they help you navigate everything else — land selection, design decisions, feasibility, budgeting, and timing. A good builder becomes your guide
through the entire custom home process. A poor fit leaves you guessing, reacting, and correcting mistakes later.
That’s why the most important early decision in building a custom home isn’t what you build — it’s who you build it with.
Why Choosing a Custom Home Builder First Prevents Expensive Mistakes
Most homeowners start with land or plans because those feel tangible.
What many don’t realize is that they’re being asked to make expert-level decisions long before they have expert-level knowledge.
The average homeowner is not:
A real estate expert
A civil engineer
A site development specialist
A construction cost estimator
And there’s nothing wrong with that.
But land and early design decisions quietly require all of that expertise — especially in custom home construction.
For example:
How utilities are routed and what they cost
How topography affects foundation and layout
How a custom home will actually sit on the property
What long driveways, access, or grading really cost
Whether early design choices limit future options
Most people don’t understand the cost implications of these decisions until after they’ve already committed to them.
By then, options are limited — and expensive.
Why Trying to Solve This Alone Is Backwards
Without a builder involved, homeowners often try to compensate by hiring multiple professionals separately:
Real estate agents
Designers
Engineers
Consultants
Each one sees only their piece of the puzzle.
A good custom home builder sees how all of those pieces interact — and how early decisions ripple into cost, schedule, and feasibility later.
That’s why starting with the right custom home builder is often less expensive, not more.
Instead of paying multiple professionals to work in isolation, you’re working with someone who understands how land, design, construction, and cost all connect.
You’re no longer guessing.
You’re being guided.
Not All Builders Work the Same Way
Builders approach projects very differently.
Some are deeply involved in the design process.
Some offer a catalog of proven plans with limited customization.
Others prefer to stay hands-off and simply build whatever plans you bring them.
None of these approaches are inherently right or wrong — but they are not interchangeable.
If you’re building something simple, a more hands-off or semi-custom approach can work well.
If you’re building a truly custom home, builder involvement during design matters — a lot.
True custom home building isn’t just about construction. It’s about understanding how a home will be lived in, how decisions compound, and how details affect the final outcome.
The Semi-Custom Option: When Proven Plans Make Sense
Many builders offer a catalog of pre-designed plans they’ve built multiple times.
For the right homeowner, this can be a great option.
If you’ve already walked a home and know the layout works for you, this approach can dramatically reduce stress. You’re not guessing how the home will feel — you already know.
Because the builder has built the plan before, they usually have:
More accurate pricing
More predictable schedules
Fewer surprises during construction
This isn’t a fully custom home — it’s a semi-custom approach — but for homeowners who want to be hands-off and avoid months of design, it can be a smart and efficient path.
Beyond the Honeymoon Stage: Why References Matter More Than Finished Photos
It’s easy to be impressed by branding, social media, and beautiful finished homes.
And to be clear — a finished home matters.
But there’s a “honeymoon stage” after move-in where everything still feels exciting.
Problems haven’t surfaced yet. Real life hasn’t fully set in.
That’s why references matter most after the honeymoon stage.
True custom home building isn’t just about delivering a beautiful product. It’s about managing hundreds of decisions, guiding clients through complexity, and standing behind
the work long after move-in.
When checking references, don’t just talk to people who just finished their homes.
Talk to clients who:
Have lived in the home long enough to go through warranty items
Have had issues arise and seen how they were handled
Can speak to communication, accountability, and follow-through
And it’s important to keep the right perspective.
No builder — or any company — should be judged solely on whether a mistake ever occurred. When you do something long enough, the human side inevitably comes into play.
An error, adjustment, or missed detail will happen at some point.
What matters far more than the mistake itself is how the builder handled it.
Did they take responsibility?
Did they communicate clearly?
Did they follow through until it was resolved properly?
That’s why speaking with references outside the honeymoon stage is so valuable. It gives insight into a builder’s professionalism, integrity, and systems — not just their ability to
deliver a good-looking finished product.
Reputation Inside the Industry Tells the Truth
A builder’s reputation with trades, suppliers, and industry professionals often reveals more than marketing ever will.
If you know people in the trades, ask them who they enjoy working for — and who they avoid.
Craftsmen see organization, accountability, cleanliness, and problem-solving up close. Their perspective is often brutally honest — and incredibly valuable.
Financial Stability, Risk, and Accountability
A builder’s financial health directly impacts your project.
Ask what banks they work with and verify standing where possible. Financial instability can lead to delayed work, stressed trades, and unfulfilled warranty obligations.
You should also understand how the builder manages:
Insurance coverage
Subcontractor insurance and workers’ compensation
Builder’s risk during construction
Lien waivers and payment tracking
These systems exist to protect you as much as the builder.
Systems Matter When Things Go Wrong
Ask builders how they manage:
Change orders
Budget tracking
Schedules
Delays and contingencies
Ask to see examples — real schedules, real systems.
Also ask scenario-based questions:
What happens if something is damaged on site?
How are issues handled when mistakes occur?
How is accountability defined when things don’t go as planned?
Problems happen. Preparation is what separates good experiences from bad ones.
Don’t Ignore the Human Factor
Finally, ask yourself one honest question:
Do I actually like working with this person?
You may be working closely together for six months, a year, or longer. If communication feels tense or trust feels off early, that rarely improves once pressure enters the picture.
You don’t need to be best friends — but you do need trust, respect, and clear communication.
Where This Fits in the Custom Home Series
This article is Part 2 of our 12-part series on building a custom home.
Part 1: Building a Custom Home: The Complete A–Z Process (Capstone)
Part 2: How to Choose the Right Custom Home Builder (You are here)
Part 3: The Hidden Cost of Poor Planning in Custom Home Builds
Each part builds on the last, guiding homeowners through the custom home process step by step — with clarity, realism, and fewer surprises.
Final Note
Choosing the right custom home builder first makes every other decision easier: land, design, budget, and execution.
The Hidden Cost of Poor Planning in Custom Home Builds
Homeowners don’t get frustrated during a custom home build because of one single issue. It’s usually a combination:
Cost overruns and going over budget
Delays and missed timelines
Schedule slips that compound into bigger disruptions
Anxiety about whether the home will actually look and feel the way they envisioned
Stress that comes from making decisions without clear foresight
A lot of that anxiety exists because most homeowners don’t have the ability to fully visualize how hundreds of decisions will come together. When proper planning and design work aren’t done up front, people are left wondering:
Is this going to look right?
Is this going to feel the way I hoped it would?
When those decisions aren’t clearly captured early—through planning, design, and visualization—that uncertainty follows the project into construction. And if a homeowner realizes after it’s built that something isn’t what they wanted, the cost isn’t just emotional anymore. Now it’s expensive, disruptive, and often requires rework.
The goal of proper planning isn’t just to manage cost. It’s to give homeowners clarity and confidence before construction starts—so they’re not reacting later to decisions they never fully saw coming.
Planning vs. Production: Where Problems Actually Start
Once construction begins, most of the major variables are already in motion:
Labor is scheduled
Materials are ordered or priced
Subcontractors are lined up weeks or months in advance
At that point, the jobsite is focused on execution—not discovery.
When problems show up during construction, they’re usually symptoms, not causes. The real causes almost always trace back to:
Decisions that weren’t fully made
Details that weren’t fully defined
Selections that were assumed instead of confirmed
Production teams can build almost anything—if they know exactly what they’re building. Problems arise when construction is forced to move forward while decisions are still being figured out.
Why Allowances Are Variables — Not Just Budget Numbers
Allowances are one of the most misunderstood parts of a custom home build.
They’re often treated like fixed numbers, when in reality they’re placeholders—and placeholders introduce uncertainty.
Let’s say a homeowner has a $5,000 lighting allowance. After selections are made, the lighting package ends up totaling $10,000, with $5,000 of that being a single, very heavy chandelier.
That alone puts the project $5,000 over the lighting budget.
But the budget overrun is only the beginning.
By the time this fixture shows up, the project is already deep into the finish stage. Drywall is complete. Ceilings are finished. Walls are painted. Floors are protected, cleaned, and ready for final trim-out.
The electrician arrives and realizes the chandelier weighs 600 pounds—and that hanging it from a standard plastic junction box isn’t an option.
So now the project has to go backwards.
To install this one light, we now have to:
Mask off the surrounding area to protect completed finishes
Cut back into finished drywall
Add structural blocking to support the fixture
Install new drywall
Finish the drywall
Attempt to match the existing ceiling texture
Repaint the entire ceiling to a natural breaking point
Re-paper and re-cover floors and adjacent areas that were already protected and cleaned once
Hang the fixture
This particular chandelier also has 600 individual crystals, requiring additional on-site labor just to assemble and install it.
Once the light is finally hung, we still have to:
Remove all protection and masking
Perform a full cleanup again
So what started as a lighting allowance decision has now created additional electrical labor, framing, drywall, paint, protection, cleanup, and schedule disruption.
This is the compound effect.
It’s not just that an allowance was exceeded. It’s that a late decision forced completed work to be undone, repaired, and rebuilt—impacting budget, schedule, and stress all at once.
The Other Allowance Problem: Forcing Homeowners to Become Experts
There’s another major issue with allowances that often gets overlooked.
When homeowners are given allowances, they’re essentially being told: “Here’s a budget. Now go make all the selections.”
Yes, there’s a trusted vendor list. Yes, vendors help guide decisions. But at the end of the day, homeowners are being asked to act as designers and builders—roles they aren’t trained for.
Most homeowners don’t understand the downstream implications of choices like:
Natural marble vs. quartz countertops
Natural stone vs. porcelain tile in a shower
Deck-mounted vs. wall-mounted faucets
Wall sconces vs. overhead lighting
Each of those decisions affects far more than appearance. A wall-mounted faucet, for example, impacts cabinet layout, sink placement, plumbing rough-ins, framing, electrical placement, and visual alignment.
Almost always, allowance-based projects end up over budget, overwhelming for the homeowner, and reactive instead of intentional.
The issue isn’t that homeowners make bad choices. It’s that the allowance model pushes critical design decisions downstream—when they’re hardest and most expensive to change.
Selection Fatigue and Scheduling Reality
Custom homes require hundreds of decisions. When those decisions aren’t finalized early, homeowners end up making choices under pressure while construction is already moving.
That’s where schedules begin to slip.
The best subcontractors—the craftsmen you actually want on your home—are like first-string athletes. They’re busy. They’re in demand. They’re staying in the game.
When a project isn’t ready because selections or details aren’t finalized, those first-string players don’t sit around waiting. They move on to the next job that is ready.
And once the schedule is back on, you can’t just pull someone off the bench—because there is no bench.
That’s how small delays quietly turn into much bigger ones.
Why Planning Protects More Than Just the Budget
Proper planning doesn’t just protect cost. It protects timelines, momentum, relationships, and peace of mind.
When decisions are clearly defined early, construction becomes execution instead of reaction. Homeowners aren’t second-guessing. Trades aren’t waiting. Schedules stay intact.
Planning isn’t about slowing projects down.
It’s about preventing them from going sideways.
Why a Small Investment in Planning Prevents Much Bigger Problems
At Spillman Homes, the internal cost for us to properly guide a client through planning, design coordination, and selections typically runs around three percent of the total build cost.
That investment covers:
Guided selections in the correct order
Renderings and detailed wall layouts showing niches and vertical finishes
Inspiration boards to coordinate colors, materials, and textures
Design coordination to avoid conflicts with structure, cabinetry, plumbing, and electrical
That work happens before production because it’s far cheaper and far less stressful to solve problems on paper than on a jobsite.
The average homeowner ends up 20–30% over budget by the end of a custom home or major renovation—largely due to late decisions, allowance overruns, rework, and schedule extensions.
When compared to a roughly 3% upfront planning investment, the distinction is clear.
That three percent isn’t an added cost. It’s risk management.
The Real Value of Planning
Most homeowners don’t regret the homes they build. They regret the stress they didn’t anticipate.
They regret feeling rushed into decisions.
They regret learning too late how one choice affected ten others.
They regret discovering that changes made during construction cost more than expected—in both money and time.
Good planning doesn’t eliminate every challenge. But it eliminates most of the avoidable ones.
The most successful projects aren’t built better.
They’re planned better.
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