??????????-???????? ?????????? vs ????????-??????-?????????????????? ?????????? in Software development

??????????-???????? ?????????? vs ????????-??????-?????????????????? ?????????? in Software development

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A fixed-cost model stands for a type of contract in which both sides, a client and a vendor, agree on the scope of work, the deadlines, and the amount of money needed for the project implementation before the process of development starts.

A fixed-cost contract can be paid one time or in several payments during a pre-agreed time frame. Even though the scope of work is fixed, there’s a decent chance that you might need to implement some additional features along the way. This may result in shifting the deadlines and increasing the costs.

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A time-and-material contract, as opposed to a fixed-cost one, offers more flexibility in terms of development time frames and budget required. Within this billing model, a client pays for the actual scope of work that is done by a service vendor. The price is formed from the amount of time a team of developers has spent on a particular project and the costs of materials used if there are. The hourly labor rates are agreed upon by a client and a contractor beforehand. As for the payment intervals, they are also flexible and negotiated in advance.

Paying for software development isn’t the same as buying products in a grocery shop. A project tends to change and grow which often requires more time and expenses. That’s why most would agree that the time-and-material model is better compared to the fixed-cost model.

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There is no perfect solution. Both pricing formulas have their benefits and drawbacks. Let’s have a closer look at them.

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Pros

  • 100% flexibility?
  • Time saving?
  • High performance?
  • Dynamic workflow?

Cons

  • The budget isn’t defined in advance
  • Unclear time-limits
  • Remote management

What Type of?Projects Will Benefit From The Time-and-Materials Model?

?? Large-scale projects

?? Complex projects

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Pros

  • Defined deadlines
  • Fixed price
  • MVP testing
  • Clarity and simplicity in management
  • Transparency in scope of work and outcomes
  • Minimal risks for the client

Cons

  • Little to no flexibility
  • The stage of planning takes a lot of time
  • Less communication and miscommunication?

What Type Of Projects Will Benefit From The Fixed-Cost Model?

?? Small projects that have just a few basic features and require little time for their implementation

?? MVPs (minimum viable products)

?? Projects that require tight deadlines?

?? Projects with a set of predetermined features

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