Cost plus contracts are an important business tool used to account for expenses incurred during production or service delivery. Basically, they outline a price structure in which a company is reimbursed for the cost of materials, labor and overhead associated with creating the product or providing the service, plus an agreed upon fee – hence the name “cost plus”. The fee can be either fixed or variable, depending on the terms of the contract. They provide buyers with the assurance of greater transparency and accuracy, as well as protecting sellers against unpredictable profit margins. Put simply, cost plus contracts are a great way to guarantee a fair deal between buyer and seller.