When a Fixed Price is a Reasonable Option

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I still run into a lot of companies that have the expectation that software development can be done on a fixed-price basis. They’re either still used to waterfall management style, or dealing with goods vendors, or, maybe a few are still running into software developers willing to work on a fixed-price basis.

On this blog, we’ve talked about the dangers inherent in fixed-price development services. How companies willing to offer an FPB will triple their hourly rate for change requests in order to make up the margin they already know exists between what they think the project will cost, and what it actually will end up costing. How every project, no matter how well planned out, rarely looks the same at the finish as it did at the start. How the number of unknowns at the start of a development project could fill a dump truck. What we haven’t talked much about is when it is reasonable to ask for, or expect, a fixed price. (more…)

Time & Materials vs. Fixed Price Software Contracting

What every client wants to know.

One of the first questions asked by nearly every client is “What will this project cost?”. It is a perfectly reasonable question. Few of us have enough money to not worry about how much a project will cost. And all clients would like to know exactly what the price will be before undertaking a project.

The most easily understood pricing model is Fixed Price.

Fixed price contracts are simple in theory. Clients tell developers exactly what they want built. Developers respond with a price. A contract is signed. At the end of the project the product is delivered and the final check is cashed. Simple, right?