Cost-plus contracts are an agreement between a buyer and seller to set the cost of a service, product, or project in advance by agreeing to a fixed fee that covers the expenses plus a percentage of profit for the seller. This type of contract is often used to ensure contractors have enough funding to cover their costs, while still allowing them to make a profit from their services. By providing a degree of certainty for both buyer and seller, cost-plus contracts can help businesses plan for the future and create successful relationships with suppliers.