Guide
Fixed price or time and materials: how to choose.
Updated
The way a project is priced decides who carries the risk when the estimate turns out to be wrong. This guide sets out how the two common models differ, which questions to ask any team before you sign, and what has to be true for a fixed price to hold.
How each model works
- Time and materials. You pay for the hours or days the team works. The scope can change freely, and so can the total. The risk of an estimate being wrong sits with you.
- Fixed price. You agree what will be delivered and what it costs before the work starts. The risk of an estimate being wrong sits with the team.
What has to be true for a fixed price to hold
A fixed price is only as good as the scope behind it. For it to hold:
- The scope is written down and agreed before the build starts, so both sides know what the price covers.
- The price comes after real work, not a guess. A short paid first step, an audit, a triage or a discovery, produces the written scope and the fixed quote.
- Changes are priced before they are built. You see what a change costs and how it affects the timeline, and you decide.
- Payments are tied to milestones, not to hours.
That is how we work. Every engagement begins with a short paid step, the scope is yours whether or not you continue with us, and the fee comes off the price if you do.
Questions to ask any team before you sign
Whichever model you are offered, the answers to these tell you where the risk really sits.
- What exactly does the price include, in writing?
- What happens to the price if I change my mind about a feature?
- If the estimate turns out to be too low, who pays?
- Will I see working software during the build, or only at the end?
- Who will actually do the work, and are they the people I am meeting now?
- Who owns the code and the accounts at the end?
Our answers, for reference: we price a change before we do the work, an underestimate is our cost, the people you meet in the first step are the people on the build, and everything is yours at launch.
When a fixed price does not fit yet
If the scope cannot be written down yet, any fixed price is a guess. That is the problem a paid first step solves: it turns an idea into a written scope, and the price comes after. If we are not sure we can ship what you need, we say so and turn the work down.
We do not bill by the hour or the day. Small jobs become a short fixed-price scope, or monthly ongoing support with a defined deliverable.