While T&M is simply the better choice for most projects, there are cases in which the fixed price model is also viable or even necessary due to the fixed budget or corporate rules. Besides enterprises, it’s often the case for publicly funded projects. However, what types can work well in this model?
- 1/1 copies of apps/websites/platforms
- Straightforward projects
- Projects with a precise A-Z specification
- Desktop to mobile/mobile to desktop development
- Early-stage/MVP versions with limited features
As you can see, all of the projects mentioned above are relatively predictable. Long story short, if the development process can be primarily outlined, it can be accurately estimated, effectively making it suitable for the fixed price model. The key indicators of an eligible project are limited scope, budget, and relatively low difficulty.
How to make sure your project is suitable for a fixed price estimation?
Before you approach a software development agency with your project, asking for an estimation, you should ask yourself a few questions.
Do you want to be an active participant in the development process? Do you need flexibility in the process?
If the answer is yes, the fixed price model is not for you because it’s heavily dependant on the initial product requirements, and it’s the agency’s role to execute the idea according to the instructions. If you decide to change the direction or add features during the process, it will require a change in the documentation and other estimations.
Are you a startup?
If you are, we would recommend T&M for the same reason as above. For startups, the idea is often still in development, and you have to be ready to react to changes in the dynamic market. So it’s only natural for cutting-edge projects that they are developed in the flexible model.
How big is the project?
It is simple. The bigger the project, the more unpredictable it is. The more unexpected it is, the more expensive it will be to compare it to the T&M model because of the higher management reserve. As long as you care about the cost, it would help if you considered choosing T&M for any project that’s estimated for longer than about four months.
How much time do you have?
Remember that the fixed price estimation process may take a lot of time. If you’re in a hurry, consider choosing the T&M model, in which you can start development almost right away and figure out the details as you go.
