fixed-price contract

economics

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Last updated

June 26, 2026

Quick Summary

A fixed-price contract establishes a price that is not subject to change after it has been agreed upon. This contrasts with other pricing methods, such as cost-plus contracts, where the price is based on actual costs plus a fee.12

Price-fixing, on the other hand, involves agreements between competitors to set or maintain prices. Such agreements are often illegal under antitrust laws, as they can harm consumers by preventing competition and leading to higher prices.3

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research and development
The role of government
…of this system led to fixed-price contracts, but these have the drawback that it is often so difficult to define the end point of a research contract that the contractor can treat a fixed-price agreement as if it were cost-plus. Another problem is that, when the end point can be…
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…of this system led to fixed-price contracts, but these have the drawback that it is often so difficult to define the end point of a research contract that the contractor can treat a fixed-price agreement as if it were cost-plus. Another problem is that, when the end point can be…
Read More