Cost-Plus-Fee

The cost-plus-fee is also referred to by the abbreviation of CPF, and represents a variant of a cost reimbursable contract in which the buyer provides reimbursement to the selling party for the allowable costs that have been accrued by the seller in the commission of the service, the creation, manufacture, delivery of the product, or in any other performance of the contracted work. In addition to this reimbursement, the seller also receives a fee that has been previously determined and calculated as a percentage measure of the total costs. The fee in these situations will tend to vary with the actual costs. Cost-plus-fee is advantageous to the seller because it allows for some baseline costs and expenditures to be reimbursed in a more guaranteed way, but also allows for the opportunity to modify fees based on percentages. As such, as budgets swell the percentage remains fixed, however the resulting fee grows accordingly.