Time and Materials vs. Fixed Price | Pros & Cons for Business Owners
Web and mobile development projects are often unique and challenging to complete within an estimated time duration. Due to this reason, developers charge according to either one of the two pricing models below:
- Time and Material Pricing Model
- Fixed Price Model
These models are entirely different from one another, and we are going to explore their pros and cons in this blog post.
What is Time and Money Pricing Model?
Time and Material (T&M) is the standard pricing model for projects with complex features and an undefined timeline. In this pricing model, businesses pay for the time invested and the cost of materials involved (Tools). Though this model is beneficial for the app owner, and we will explain this later in the blog post, it requires careful estimation of time and scope, which might have to be discussed daily.
What Is Fixed Price Model?
As the name suggests, the Fixed Price model involves paying a lump sum amount for the project. In this pricing model, the development cost is fixed regardless of the time investment from the development team and the materials involved. As a product owner, you develop a detailed timeline and project details which your development team will follow to deliver your project.
Pros of Time and Material Pricing For Business Owners
1. Less Time Consuming
The Time and Material pricing model does not require the product owner to share details about their project beforehand. As the development process continues, new information is shared daily, and it mitigates the time needed to draft all the details of your app before it enters the development stage.
2. Flexible to Changes
Since there is no defined timeline, this pricing model allows businesses to make changes as they go with their project. Once you have launched your MVP (Minimum Viable Product), you can go along with flexible shifts in the project scope according to the feedback you gather.
Cons of Time and Material Pricing
1. Flexible Budget
While Time and Material pricing may allow changes at any interval, you need to know that the longer your project takes, the more it will cost you. You might be worried that your development team will intentionally delay the project to make more money, but that’s not true. At Teqnovos, we work closely with our clients and share daily updates. However, it would help if you focused on not causing any delays from your end. Otherwise, the project might accumulate a high cost.
2. Communication Issue
One of the biggest fears a client has when working with the Time and Material pricing model is facing communication barriers. You might fear leaving your development team on their own devices, which may cause delays and ultimately increase the budget. However, at Teqnovos, we solve these issues by scheduling regular meetings and carry direct communication with the project owner to mitigate any delays.
Pros of Fixed Cost Model
1. Complete Control over Budget
The Fixed Price model allows businesses to have complete control over the budget because they share details about their idea before the development begins. However, locked by fixed budget constraints, some development teams look for shortcuts that jeopardize the app security and result in a haphazard project.
2. No Engagement Necessary During Development
The Fixed Price model allows businesses to focus on their work without being frequently involved in the project. Since the development team has all the information, the final project will be completed according to the set deadline. However, this means you have no control over the project quality until your web or mobile app is developed completely.
Cons of Fixed Price Model
1. Lack of Room for Changes
In a Fixed Price model, businesses don’t have the liberty to make changes as they go. The budget constraints prevent alterations to the project scope. However, this does not mean you can’t make any changes. Slight modifications and errors from the development team are corrected, but massive reworks are not possible under this pricing model.
2. Limited Control Over Quality
The Fixed Price model entails a lack of control over quality. Since the budget is limited, your development team doesn’t have many options to express its true potential. Moreover, an unprecedented situation during the development phase is addressed through shortcuts that jeopardize the project quality, and the app owner doesn’t have much control over it.
The Bottom Line
Choosing between Time and Material and Fixed Price model can be complicated for many app owners. Both pricing models have their particularities, and there is no in-between. However, we recommend the Time and Material pricing model because the app owners have indirect control over the budget by speeding up things and mitigating revamps. At Teqnovos, we create a communication environment that resolves any delays and flourishes coordination between the app owner and our development team. You can check out our Portfolio for more information or reach out to us by clicking here.