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Time & Material Vs Fixed Price:

Custom software development requires your close attention during the whole development process. Initially you have to provide all the necessary information to the customer software development company during the information gathering process. The more control you have over your project the more likely the outcome will be the same as your concept. Another important factor to consider is the pricing model. You need to choose the best option according to your requirements and budget. Most of the companies will offer two options - Fixed Price or a Time & Material agreement.

What is a Fixed price contract?

A fixed price contract is where the custom software development company completes their work within a given time and for a fixed price. Often IT projects fail due to unclear requirements. To be successful, a project you should be clear on the exact requirements for the project. Fixed price projects are usually suitable for smaller projects like website design where the specifications can be clearly defined and agreed upon.

Advantages of a Fixed Price Contract:

Budget Friendly:

You know the costings for the whole process.


The scope of the project is defined prior to the project commencing so there should be no surprises.

Disadvantages of a Fixed Price Contract:

When it comes to budget control, a fixed price agreement might be beneficial for you but might not work for the developer. If you don’t have a clear idea about what you want your software to do for you, this pricing model is:


The software you receive will be what exactly what you requested at the beginning of the project, which means if you change your mind during the development process there will be additional charges.

What is a Time & Material Contract:

A Time & Material agreement is totally different from a fixed price contract as this model is based on the total hours spent on the project along with materials needed. If you want to adjust or change the requirements the pricing model is flexible. You do not need to have a clear vision about your project prior to it commencing. We recommend you to choose a Time & Material contract for larger projects like mobile application development.

Less Flexible:

Although IT is one of the fastest growing sectors, the number of tools and methodologies to improve the software development process is continuously increasing, and some companies still refuse to change with the flow of information.Depending on your requirements, you can choose a company to work on your project. If you're still struggling to determine your needs, choose a company that uses agile practices.

Advantages of a Time & Material Contract:


You can change or add features during the development process.


You have the control over your product development and can revise the specifications as needed during development.


Developers can start coding right away and you can see how much time is being spent on each process.

Disadvantages of a Time & Material Contract:

While the T&M pricing model will give you flexibility and control over your project you will have little control of the budget. Paying for labour per hour the total amount may exceed the estimated amount.You can gain control over the project and better manage your budget with a project cost estimation. We always provide you with this cost estimation as we are aware that smaller companies may have a limited budget to develop the project.

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