While the financial transparency of the fixed-price model might seem attractive, T&M often proves to be a more cost-effective and secure option, ultimately leading to a higher quality product. Here's why:
Faster Start
T&M eliminates the lengthy process of creating fixed-price estimates, allowing development to begin sooner. You let software development process to begin quicker, with your software development agencies starting sooner.
With T&M, clients prioritize tasks in a backlog, enabling a more agile approach. Imagine you're planning a road trip - a fixed-price contract might be difficult to create if you're open to exploring new detours along the way. A T&M approach allows you to budget for gas and map out the general route, but also be flexible to take that spontaneous turn onto a scenic backroad. Sure, (often) you will know how much you will spend. You won't have the opportunity to explore new unknown places, which can turn out to be gems.
Flexibility and Control
T&M fosters a dynamic development process. Clients can actively participate, propose modifications, and incorporate new features without incurring significant roadblocks or additional upfront costs. This aligns perfectly with agile methodologies like Scrum, which emphasize continuous improvement through client feedback. Think of it like chartering a boat for your island vacation. With a fixed-price cruise, your travel plan is set. A T&M allows you to steer the course along the way, deciding to linger longer at a beautiful beach or detour to check out some hidden coves.
Transparency and Collaboration
Agile methodology in software development, often used with T&M, promotes transparency. Clients receive regular updates through sprints (short development cycles) and participate in reviews, ensuring the project stays on track and meets their needs. Imagine working with a local architect who keeps you updated on the construction progress and welcomes your input throughout the renovation.
That's not even the main issue. With the Fixed Price model, the software development company must assume a safety margin, just in case something goes awry. Sometimes that's as much as 30% of the total deal.
A More Engaged Development Team
T&M incentivizes developers to be more invested in the project's success. Their expertise can be fully utilized to not only execute the plan but also suggest improvements and innovative solutions as the project unfolds. In a T&M scenario, the developers are like your personal sous chefs in the kitchen. They can not only follow your recipe, but creatively suggest ingredient substitutions or new flavor profiles to enhance the final dish.
