You're right. This is not normal or customary. Not a great start if you're already getting cold feet.

Did he put the actual lot in there or is it related to work needed on the lot such as grading etc.?

10% is not customary anywhere. This isn’t 2008. Unless overhead is a completely different line in addition to the 10% profit, there’s something bad wrong with that. That’s is a money losing price. You may be attempting to squeeze too much of a bargain here and the workarounds are how he makes that back. Better ask about the change order fees.

I have to agree with Sophie that 10% seems very low. Heck during the recession I paid 15%. Now standard in our neighborhood is 20-30% and sometimes even higher.

As for adding on for the cost of the lot? Absolutely NOT.

Why not just ask about it?

If he wants 15% he should just put 15% in the contract not this bs.

Thanks for the input. I just needed a sanity check to make sure I was not missing something. I will add it to the list of things to discuss with him.

10% on the lot, 15% on the build. Are you okay with the overall amount? Quibbling over how you got there doesn't seem all that productive. Final cost would seem to be the important outcome here.

If he wants 15% he should just put 15% in the contract not this bs.

Except that would also rule change orders and cost overruns...

If you are purchasing the lot, the builder's fee should be based on the value of the improvement, i.e., the home excluding the lot. 10% would be considered on the low end in our area unless the home is $1.5 million or more.

Our development had lot "premium" based on the house location first 5 had none. Next 3 were 15k remaining (some north east facing, some on a cul de sac) had 30 to 35k premium. These homes were in the 850 to 1mill range.