{"id":137,"date":"2017-11-15T10:31:36","date_gmt":"2017-11-15T09:31:36","guid":{"rendered":"https:\/\/dotinum.com\/blog\/?p=137"},"modified":"2025-09-04T11:30:39","modified_gmt":"2025-09-04T09:30:39","slug":"fixed-price-vs-timematerials","status":"publish","type":"post","link":"https:\/\/dotinum.com\/blog\/fixed-price-vs-timematerials\/","title":{"rendered":"Fixed price vs time&#038;materials &#8211; pricing models in software houses"},"content":{"rendered":"\n<p style=\"text-align: center;\"><em><b>TL;DR <\/b>When outsourcing software development, one of the first decisions you\u2019ll face is choosing a pricing model. Should you go for the predictability of fixed price, or the flexibility of time &amp; materials? This article explains both approaches in detail, highlights their pros and cons, and shows which model fits different project scenarios. By the end, you\u2019ll know how to avoid costly mistakes and make a well-informed choice for your business.<\/em><\/p>\n\n\n\n<nav aria-label=\"Table of Contents\" class=\"wp-block-table-of-contents\"><ol><li><a class=\"wp-block-table-of-contents__entry\" href=\"https:\/\/dotinum.com\/blog\/fixed-price-vs-timematerials\/#short-story-about-a-fixed-price\">Short story about a fixed price<\/a><ol><li><a class=\"wp-block-table-of-contents__entry\" href=\"https:\/\/dotinum.com\/blog\/fixed-price-vs-timematerials\/#fixed-price-definition\">Fixed price definition<\/a><\/li><li><a class=\"wp-block-table-of-contents__entry\" href=\"https:\/\/dotinum.com\/blog\/fixed-price-vs-timematerials\/#pros-and-cons-of-fixed-price-agreements\">Pros and cons of fixed price agreements<\/a><ol><li><a class=\"wp-block-table-of-contents__entry\" href=\"https:\/\/dotinum.com\/blog\/fixed-price-vs-timematerials\/#pros\">Pros<\/a><ol><li><a class=\"wp-block-table-of-contents__entry\" href=\"https:\/\/dotinum.com\/blog\/fixed-price-vs-timematerials\/#transparency\">Transparency<\/a><\/li><li><a class=\"wp-block-table-of-contents__entry\" href=\"https:\/\/dotinum.com\/blog\/fixed-price-vs-timematerials\/#predictability\">Predictability<\/a><\/li><li><a class=\"wp-block-table-of-contents__entry\" href=\"https:\/\/dotinum.com\/blog\/fixed-price-vs-timematerials\/#small-involvement\">Small involvement<\/a><\/li><\/ol><\/li><li><a class=\"wp-block-table-of-contents__entry\" href=\"https:\/\/dotinum.com\/blog\/fixed-price-vs-timematerials\/#cons\">Cons<\/a><ol><li><a class=\"wp-block-table-of-contents__entry\" href=\"https:\/\/dotinum.com\/blog\/fixed-price-vs-timematerials\/#no-flexibility\">No flexibility<\/a><\/li><li><a class=\"wp-block-table-of-contents__entry\" href=\"https:\/\/dotinum.com\/blog\/fixed-price-vs-timematerials\/#variability-of-the-final-cost\">Variability of the final cost<\/a><\/li><li><a class=\"wp-block-table-of-contents__entry\" href=\"https:\/\/dotinum.com\/blog\/fixed-price-vs-timematerials\/#little-control-of-the-project\">Little control of the project <\/a><\/li><li><a class=\"wp-block-table-of-contents__entry\" href=\"https:\/\/dotinum.com\/blog\/fixed-price-vs-timematerials\/#lower-quality\">Lower quality <\/a><\/li><\/ol><\/li><\/ol><\/li><li><a class=\"wp-block-table-of-contents__entry\" href=\"https:\/\/dotinum.com\/blog\/fixed-price-vs-timematerials\/#time-materials-definition\">Time&amp;materials definition<\/a><\/li><li><a class=\"wp-block-table-of-contents__entry\" href=\"https:\/\/dotinum.com\/blog\/fixed-price-vs-timematerials\/#pros-and-cons-of-time-materials-agreements\">Pros and cons of time &amp; materials agreements<\/a><ol><li><a class=\"wp-block-table-of-contents__entry\" href=\"https:\/\/dotinum.com\/blog\/fixed-price-vs-timematerials\/#pros\">PROS<\/a><ol><li><a class=\"wp-block-table-of-contents__entry\" href=\"https:\/\/dotinum.com\/blog\/fixed-price-vs-timematerials\/#flexibility\">Flexibility<\/a><\/li><li><a class=\"wp-block-table-of-contents__entry\" href=\"https:\/\/dotinum.com\/blog\/fixed-price-vs-timematerials\/#a-lot-of-control\">A lot of control<\/a><\/li><li><a class=\"wp-block-table-of-contents__entry\" href=\"https:\/\/dotinum.com\/blog\/fixed-price-vs-timematerials\/#time-saving\">Time saving<\/a><\/li><li><a class=\"wp-block-table-of-contents__entry\" href=\"https:\/\/dotinum.com\/blog\/fixed-price-vs-timematerials\/#money-saving\">Money saving <\/a><\/li><li><a class=\"wp-block-table-of-contents__entry\" href=\"https:\/\/dotinum.com\/blog\/fixed-price-vs-timematerials\/#agile-methodology\">Agile methodology<\/a><\/li><\/ol><\/li><li><a class=\"wp-block-table-of-contents__entry\" href=\"https:\/\/dotinum.com\/blog\/fixed-price-vs-timematerials\/#cons\">CONS<\/a><ol><li><a class=\"wp-block-table-of-contents__entry\" href=\"https:\/\/dotinum.com\/blog\/fixed-price-vs-timematerials\/#less-budget-control\">Less budget control<\/a><\/li><li><a class=\"wp-block-table-of-contents__entry\" href=\"https:\/\/dotinum.com\/blog\/fixed-price-vs-timematerials\/#deep-engagement\">Deep engagement<\/a><\/li><\/ol><\/li><\/ol><\/li><li><a class=\"wp-block-table-of-contents__entry\" href=\"https:\/\/dotinum.com\/blog\/fixed-price-vs-timematerials\/#and-the-winner-is\">And the winner is&#8230;<\/a><\/li><li><a class=\"wp-block-table-of-contents__entry\" href=\"https:\/\/dotinum.com\/blog\/fixed-price-vs-timematerials\/#faq\">FAQ<\/a><ol><li><a class=\"wp-block-table-of-contents__entry\" href=\"https:\/\/dotinum.com\/blog\/fixed-price-vs-timematerials\/#what-is-a-fixed-price-model-in-software-development\">What is a fixed price model in software development?<\/a><\/li><li><a class=\"wp-block-table-of-contents__entry\" href=\"https:\/\/dotinum.com\/blog\/fixed-price-vs-timematerials\/#what-is-a-time-materials-model\">What is a time &amp; materials model?<\/a><\/li><li><a class=\"wp-block-table-of-contents__entry\" href=\"https:\/\/dotinum.com\/blog\/fixed-price-vs-timematerials\/#how-do-i-decide-between-fixed-price-and-time-materials\">How do I decide between fixed price and time &amp; materials?<\/a><\/li><\/ol><\/li><\/ol><\/li><\/ol><\/nav>\n\n\n\n<h1 class=\"wp-block-heading\" id=\"short-story-about-a-fixed-price\"><span style=\"font-size: 14pt;\"><b>Short story about a fixed price<\/b><\/span><\/h1>\n\n\n\n<p class=\"wp-block-paragraph\">Harry was always a very frugal person &#8211; both in a private life and at work. He has just established a start-up and was looking for a remote software development team in order to build the website. You can guess, that his main aim was to save money as much as possible.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">He wanted to make the best decision &#8211; therefore he started talks with a one company from Eastern Europe, because they were said to have reasonable prices and good quality.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">As his startup was just fledgling, he wasn\u2019t sure how the website should be created. However, there was one thing he wanted to know immediately &#8211; the price!<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In the face of so many uncertainties, web development company couldn\u2019t estimate the whole project at this stage. This is why they offered the best possible solution for both of them &#8211; <b>time&amp;materials<\/b> model.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Harry felt really nervous &#8211; he has never heard about this term before. Are they going to cheat on him or what?! He asked them suspiciously what it means. They explained how it works and Harry clutched his head in astonishment. He can\u2019t approve of something like this. He must know the price! No matter what. Or they establish fixed prices or there will be no cooperation!<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Poor web development company had no choice &#8211; they had to overstate the price, just in case of unexpected market changes. Nevertheless, Harry agreed, because he felt so safe with a fact that he knows the price.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This story doesn\u2019t have a happy end. Many unexpected changes weren\u2019t included in the agreement so the project has been finished and there were still many features to add! Well, not only has Harry not saved money, but he also had to spend at least twice more in the end! If only he had chosen time&amp;materials..<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">I guess you don\u2019t want to make the same mistake as Harry? Is so, familiarize yourself with the \u201ctime&amp;materials\u201d and \u201cfixed prices\u201d terms and choose the approach wisely, on the basis of your actual needs!<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"fixed-price-definition\"><span style=\"font-size: 14pt;\"><b>Fixed price definition<\/b><\/span><\/h2>\n\n\n\n<figure class=\"wp-block-image\"><img loading=\"lazy\" decoding=\"async\" width=\"1200\" height=\"800\" src=\"https:\/\/dotinum.com\/blog\/wp-content\/uploads\/2017\/11\/Optimized-helloquence-51716.jpg\" alt=\"fixed price definition\" class=\"wp-image-141\" srcset=\"https:\/\/dotinum.com\/blog\/wp-content\/uploads\/2017\/11\/Optimized-helloquence-51716.jpg 1200w, https:\/\/dotinum.com\/blog\/wp-content\/uploads\/2017\/11\/Optimized-helloquence-51716-300x200.jpg 300w, https:\/\/dotinum.com\/blog\/wp-content\/uploads\/2017\/11\/Optimized-helloquence-51716-768x512.jpg 768w, https:\/\/dotinum.com\/blog\/wp-content\/uploads\/2017\/11\/Optimized-helloquence-51716-1024x683.jpg 1024w, https:\/\/dotinum.com\/blog\/wp-content\/uploads\/2017\/11\/Optimized-helloquence-51716-540x360.jpg 540w\" sizes=\"auto, (max-width: 1200px) 100vw, 1200px\" \/><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">This term is something we are used to know in our lives. We meet fixed prices almost everywhere &#8211; at restaurants, grocery or clothing shops. However, there is one, main reason why this system works there &#8211; suppliers know the exact cost of their products before selling them. Software development companies, in many cases, don\u2019t know that before the project starts.<\/p>\n\n\n\n<p class=\"has-large-font-size wp-block-paragraph\"><mark style=\"background-color:#39b5ff;color:#ffffff\" class=\"has-inline-color\"><b> Fixed price<\/b> (<i>or a lump sum contract) <\/i><\/mark> is an arrangement, which contains clear requirements that will not change. The precise budget for the project and deadlines are established from the beginning.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Why is it so important? Because otherwise, a software provider, with so many unknowns will have to overestimate the price. This approach is very risky for him. If he doesn\u2019t know how much time and effort the project takes, he has to protect himself from the possible financial loss.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This model of pricing methods works very well, when the scope of the project is small and outcomes are highly predictable.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"pros-and-cons-of-fixed-price-agreements\"><span style=\"font-size: 14pt;\"><b><strong>Pros and cons of fixed price agreements<\/strong><\/b><\/span><\/h2>\n\n\n\n<figure class=\"wp-block-image\"><img loading=\"lazy\" decoding=\"async\" width=\"1200\" height=\"799\" src=\"https:\/\/dotinum.com\/blog\/wp-content\/uploads\/2017\/11\/Optimized-mari-helin-tuominen-38313.jpg\" alt=\"fixed price agreement\" class=\"wp-image-142\" srcset=\"https:\/\/dotinum.com\/blog\/wp-content\/uploads\/2017\/11\/Optimized-mari-helin-tuominen-38313.jpg 1200w, https:\/\/dotinum.com\/blog\/wp-content\/uploads\/2017\/11\/Optimized-mari-helin-tuominen-38313-300x200.jpg 300w, https:\/\/dotinum.com\/blog\/wp-content\/uploads\/2017\/11\/Optimized-mari-helin-tuominen-38313-768x511.jpg 768w, https:\/\/dotinum.com\/blog\/wp-content\/uploads\/2017\/11\/Optimized-mari-helin-tuominen-38313-1024x682.jpg 1024w, https:\/\/dotinum.com\/blog\/wp-content\/uploads\/2017\/11\/Optimized-mari-helin-tuominen-38313-541x360.jpg 541w\" sizes=\"auto, (max-width: 1200px) 100vw, 1200px\" \/><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"pros\"><b>Pros<\/b><\/h3>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"transparency\"><b>Transparency<\/b><\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">As all requirements, deadlines and costs are set down in advance, the client has a sense of the security &#8211; everything is determined in the arrangement.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"predictability\"><b>Predictability<\/b><\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">The company can plan the budget for all the ongoing projects upfront. They are certain that there will be no additional outlays, that could possibly surprise their company in the future, after the project is completed.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"small-involvement\"><b>Small involvement<\/b><\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">Initial negotiations could take some time.Then, everything is included in the contract &#8211; responsibilities, tasks and the general cooperation expectations. In this way the client doesn\u2019t have to spend additional time on controlling the provider\u2019s performance on the particular stages of the project. He just waits for the final effect.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"cons\"><b>Cons<\/b><\/h3>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"no-flexibility\"><b>No flexibility<\/b><\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">If the need arises to make any changes, it could be rather difficult to put into practice. Both sides have to strictly stick to the contract. It is a big limitation, especially for the customer, that doesn\u2019t have a chance to add any new feature during the course of the project.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"variability-of-the-final-cost\"><b>Variability of the final cost<\/b><\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">The price of the project is only estimated in the beginning. However, it can\u2019t change, after achieving the ultimate result. It happens, that the final cost of the work is different than it was assumed. For instance, it can be smaller and the client will lose some of his money in this way. Nevertheless, the die was cast. It\u2019s a customer\u2019s risk while deciding on a fixed price model.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"little-control-of-the-project\"><b>Little control of the project<\/b> <\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">After determining your expectations in the beginning, then you will be usually waiting for the final result. It means, you won\u2019t be able to follow and control every progress made in your project, because everything must be established in the agreement.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"lower-quality\"><b>Lower quality<\/b> <\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">The software provider is limited by the price established upfront while choosing materials. It could influence your project negatively &#8211; outsourcing company may mainly focus on not exceeding the budget and maximizing their margin. As a result, they could decide on using a lower-grade materials, just not to overrun the fixed price.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"time-materials-definition\"><span style=\"font-size: 14pt;\"><b>Time&amp;materials definition<\/b><\/span><\/h2>\n\n\n\n<figure class=\"wp-block-image\"><img loading=\"lazy\" decoding=\"async\" width=\"1198\" height=\"900\" src=\"https:\/\/dotinum.com\/blog\/wp-content\/uploads\/2017\/11\/Optimized-kevin-392517.jpg\" alt=\"Time&amp;materials definition\" class=\"wp-image-143\" srcset=\"https:\/\/dotinum.com\/blog\/wp-content\/uploads\/2017\/11\/Optimized-kevin-392517.jpg 1198w, https:\/\/dotinum.com\/blog\/wp-content\/uploads\/2017\/11\/Optimized-kevin-392517-300x225.jpg 300w, https:\/\/dotinum.com\/blog\/wp-content\/uploads\/2017\/11\/Optimized-kevin-392517-768x577.jpg 768w, https:\/\/dotinum.com\/blog\/wp-content\/uploads\/2017\/11\/Optimized-kevin-392517-1024x769.jpg 1024w, https:\/\/dotinum.com\/blog\/wp-content\/uploads\/2017\/11\/Optimized-kevin-392517-479x360.jpg 479w\" sizes=\"auto, (max-width: 1198px) 100vw, 1198px\" \/><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">This method is very popular when it comes to cooperating with a software house.<\/p>\n\n\n\n<p class=\"has-large-font-size wp-block-paragraph\"><b><mark style=\"background-color:#39b5ff;color:#ffffff\" class=\"has-inline-color\"> Time&amp;materials <\/mark><\/b>is much different than fixed price model, because in this case you pay exactly for what has been done. It means, the software provider bills you on the base of hourly rates of labor and costs of materials.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Moreover, you will receive a precise reports containing specific information regarding progresses of the work. You also get the access to all data and the transparency of costs.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">You don\u2019t waste your time on conducting long debates regarding conditions of the cooperation. In exchange of this, the outsourcing team starts working on your project immediately.This type of pricing model works, when you are not sure about the shape of the final outcome you want to achieve and the scope of the project is big. If your aim is to create a product together with a software provider, which is exactly tailored to your needs, time&amp;material is a good choice.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"pros-and-cons-of-time-materials-agreements\"><span style=\"font-size: 14pt;\"><b><strong>Pros and cons of time &amp; materials agreements<\/strong><\/b><\/span><\/h2>\n\n\n\n<figure class=\"wp-block-image\"><img loading=\"lazy\" decoding=\"async\" width=\"1200\" height=\"794\" src=\"https:\/\/dotinum.com\/blog\/wp-content\/uploads\/2017\/11\/Optimized-lukas-blazek-263122.jpg\" alt=\"Benefits and disadvantages of a time&amp;material agreement\" class=\"wp-image-144\" srcset=\"https:\/\/dotinum.com\/blog\/wp-content\/uploads\/2017\/11\/Optimized-lukas-blazek-263122.jpg 1200w, https:\/\/dotinum.com\/blog\/wp-content\/uploads\/2017\/11\/Optimized-lukas-blazek-263122-300x199.jpg 300w, https:\/\/dotinum.com\/blog\/wp-content\/uploads\/2017\/11\/Optimized-lukas-blazek-263122-768x508.jpg 768w, https:\/\/dotinum.com\/blog\/wp-content\/uploads\/2017\/11\/Optimized-lukas-blazek-263122-1024x678.jpg 1024w, https:\/\/dotinum.com\/blog\/wp-content\/uploads\/2017\/11\/Optimized-lukas-blazek-263122-544x360.jpg 544w\" sizes=\"auto, (max-width: 1200px) 100vw, 1200px\" \/><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"pros\"><b>PROS<\/b><\/h3>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"flexibility\"><b>Flexibility<\/b><\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">In this case, you are able to change, add or remove any feature you want, no matter what kind of stage the project is. Project\u2019s requirements won\u2019t be a limitation &#8211; you can always adjust them to the changing business circumstances. So you won\u2019t waste your time on renegotiation the agreement, as it is in the case of fixed price.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"a-lot-of-control\"><b>A lot of control<\/b><\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">You can take an active part in the process of creating your vision. It means, you have a real influence on the final outcome. With your contribution to the project, it will be much more easier to achieve the goal you desire. You and developers become a team members that are working together towards the same aim.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"time-saving\"><b>Time saving<\/b><\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">It\u2019s much faster to sign a time&amp;material contract. You don\u2019t waste time on bidding the offer or determining requirements in a rush. Web development company is ready to kick off a new project as soon as possible. All details will be adjusted to your expectations during the course of the project.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"money-saving\"><b>Money saving<\/b> <\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">By choosing fixed prices, software house charges you more for the uncertainty &#8211; they only guess how much the cost of product would be. With a time&amp;material agreement you will pay for the actual results, not for the price assessment.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"agile-methodology\"><b>Agile methodology<\/b><\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">Using this method will influence on the final outcome &#8211; the quality of your project will be much higher. How does it work? Software provider builds the plan of your project and then divides the process of development on a few stages, called \u201csprints\u201d. At the end of every phase, everything is tested and consulted with a client\u2019s representative. It is a perfect moment for his feedback concerning possible changes and improvements.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"cons\"><b>CONS<\/b><\/h3>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"less-budget-control\"><b>Less budget control<\/b><\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">Your company has usually a determined budget for particular projects. By choosing time&amp;materials, you have to be aware that sometimes costs can increase more than expected, if the scope of the project changed significantly. For example it can turn out that you needed many more features than you assumed in the beginning. In this case the cost of the final result will be higher. However, you will achieve the product you are satisfied with.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"deep-engagement\"><b>Deep engagement<\/b><\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">On the one hand, the possibility of having a big impact on the final outcome is a relevant advantage. On the other hand, controlling every stage of the project requires a lot of time. It means, there should be someone responsible for this activity in the company, what can become troublesome in the long term.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"and-the-winner-is\"><span style=\"font-size: 14pt;\"><b><a href=\"Conclusion: how to choose the right pricing model for your project\">And the winner is&#8230;<\/a><\/b><\/span><\/h2>\n\n\n\n<figure class=\"wp-block-image\"><img loading=\"lazy\" decoding=\"async\" width=\"1200\" height=\"786\" src=\"https:\/\/dotinum.com\/blog\/wp-content\/uploads\/2017\/11\/Optimized-luiz-hanfilaque-342635.jpg\" alt=\"fixed price vs. time&amp;materials\" class=\"wp-image-145\" srcset=\"https:\/\/dotinum.com\/blog\/wp-content\/uploads\/2017\/11\/Optimized-luiz-hanfilaque-342635.jpg 1200w, https:\/\/dotinum.com\/blog\/wp-content\/uploads\/2017\/11\/Optimized-luiz-hanfilaque-342635-300x197.jpg 300w, https:\/\/dotinum.com\/blog\/wp-content\/uploads\/2017\/11\/Optimized-luiz-hanfilaque-342635-768x503.jpg 768w, https:\/\/dotinum.com\/blog\/wp-content\/uploads\/2017\/11\/Optimized-luiz-hanfilaque-342635-1024x671.jpg 1024w, https:\/\/dotinum.com\/blog\/wp-content\/uploads\/2017\/11\/Optimized-luiz-hanfilaque-342635-550x360.jpg 550w\" sizes=\"auto, (max-width: 1200px) 100vw, 1200px\" \/><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">There is no winner here. Choosing an appropriate pricing model depends on many factors, like the scope of the project, your company\u2019s goals or the budget.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">However, bear in mind that the software development industry is very innovative and therefore variable. This is why establishing a fixed price could be a challenge. Therefore time&amp;materials seems like a more flexible and realistic model.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The choice is yours. Good luck!<\/p>\n\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\"><strong>Working with an remote team could be a challenge sometimes &#8211; take a look at a few rules how to make the IT outsourcing work!<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-embed-wordpress wp-block-embed is-type-wp-embed is-provider-blog-dotinum-com\"><div class=\"wp-block-embed__wrapper\">\nhttps:\/\/dotinum.com\/blog\/2017\/09\/08\/rules-make-outsourcing-work\/\n<\/div><\/figure>\n\n\n\n<p class=\"has-text-align-center wp-block-paragraph\">Take a look at our presentation about fixed price vs. time&amp;materials\ud83d\udc47<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-rich is-provider-slideshare wp-block-embed-slideshare center-block\"><div class=\"wp-block-embed__wrapper\">\nhttps:\/\/www.slideshare.net\/Dotinum\/fixed-price-vs-timematerial\n<\/div><\/figure>\n\n\n\n<p class=\"has-text-align-center has-medium-font-size wp-block-paragraph\"><strong>Need a help with building the website or mobile application?<\/strong><\/p>\n\n\n\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link has-background wp-element-button\" href=\"https:\/\/dotinum.com\/#contact\" style=\"background-color:#39b5ff\">Drop us a message<\/a><\/div>\n\n\n\n<p class=\"wp-block-paragraph\">Dotinum is a software house and creative agency from Poland, established in 2002. We specialize in web, mobile and e-commerce development.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"faq\">FAQ<\/h2>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"what-is-a-fixed-price-model-in-software-development\"><strong>What is a fixed price model in software development?<\/strong><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">It\u2019s a pricing agreement where the scope, cost, and deadlines are defined upfront. The client knows the price in advance, but flexibility is limited.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"what-is-a-time-materials-model\"><strong>What is a time &amp; materials model?<\/strong><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">This model charges based on actual work hours and resources used. It gives more flexibility and transparency but requires active client involvement.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"how-do-i-decide-between-fixed-price-and-time-materials\"><strong>How do I decide between fixed price and time &amp; materials?<\/strong><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Consider project scope, budget flexibility, and how clearly requirements are defined. Fixed price is better for small, simple projects; time &amp; materials works best for evolving, complex projects.<\/p>\n\n\n","protected":false},"excerpt":{"rendered":"<p>TL;DR When outsourcing software development, one of the first decisions you\u2019ll face is choosing a pricing model. Should you go for the predictability of fixed price, or the flexibility of time &amp; materials? This article explains both approaches in detail, highlights their pros and cons, and shows which model fits different project scenarios. By the [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":155,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_crdt_document":"","footnotes":""},"categories":[1],"tags":[9,11,10],"class_list":["post-137","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-bez-kategorii","tag-fixed-price","tag-software-house","tag-timematerials"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Fixed price vs time&amp;materials - pricing models - Dotinum Blog<\/title>\n<meta name=\"description\" content=\"Fixed price or time&amp;materials - find out which pricing method would be better for your business while working with a software house.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/dotinum.com\/blog\/fixed-price-vs-timematerials\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Fixed price vs time&amp;materials - pricing models - Dotinum Blog\" \/>\n<meta property=\"og:description\" content=\"Fixed price or time&amp;materials - find out which pricing method would be better for your business while working with a software house.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/dotinum.com\/blog\/fixed-price-vs-timematerials\/\" \/>\n<meta property=\"og:site_name\" content=\"Blog Dotinum.com\" \/>\n<meta property=\"article:published_time\" content=\"2017-11-15T09:31:36+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2025-09-04T09:30:39+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/dotinum.com\/blog\/wp-content\/uploads\/2017\/11\/neonbrand-258972.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"2496\" \/>\n\t<meta property=\"og:image:height\" content=\"1664\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Anna\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Anna\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"10 minutes\" \/>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Fixed price vs time&materials - pricing models - Dotinum Blog","description":"Fixed price or time&materials - find out which pricing method would be better for your business while working with a software house.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/dotinum.com\/blog\/fixed-price-vs-timematerials\/","og_locale":"en_US","og_type":"article","og_title":"Fixed price vs time&materials - pricing models - Dotinum Blog","og_description":"Fixed price or time&materials - find out which pricing method would be better for your business while working with a software house.","og_url":"https:\/\/dotinum.com\/blog\/fixed-price-vs-timematerials\/","og_site_name":"Blog Dotinum.com","article_published_time":"2017-11-15T09:31:36+00:00","article_modified_time":"2025-09-04T09:30:39+00:00","og_image":[{"width":2496,"height":1664,"url":"https:\/\/dotinum.com\/blog\/wp-content\/uploads\/2017\/11\/neonbrand-258972.jpg","type":"image\/jpeg"}],"author":"Anna","twitter_card":"summary_large_image","twitter_misc":{"Written by":"Anna","Est. reading time":"10 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/dotinum.com\/blog\/fixed-price-vs-timematerials\/#article","isPartOf":{"@id":"https:\/\/dotinum.com\/blog\/fixed-price-vs-timematerials\/"},"author":{"name":"Anna","@id":"https:\/\/dotinum.com\/blog\/#\/schema\/person\/7f633487fa7d7b35aaeb9a58f671e5e0"},"headline":"Fixed price vs time&#038;materials &#8211; 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