Fixed price contract is a pretty common thing. We can find countless states of affair where the client wants to get a strict plan to a strict budget. The cost of his or her project will be determined in accordance with its documentation. If the documentation is not prepared, it can be created during the modeling phase, which includes project requirements analysis with the eventual estimate. After the estimation stage, the scope of the current project cannot be changed due to the contract. Any upcoming changes will be considered additional functionality that will be implemented upon the current development stage.
How to perform a correct estimation? First of all, the full understanding of the client’s goals and the presence of the necessary requirements are significant. Thus, the more information we can get from the client, the more accurate analysis can be made and the total price can be determined. Such a situation perfectly fits the fixed price model.
However, the whole case may be more complicated than it seems at first glance.
So let’s jump into it and figure out when it is a good idea to follow the fixed price approach.
The main conditions to follow
In order to follow the fixed price model in the best way possible, the project should meet these initial terms:
The clear and transparent scope of the current projects
Both contractor and client know exactly what they are responsible for and each other’s efficiency, competence, and skills
These conditions bring win-win position for the client and the contractor. Thus, the client can feel confident about the contractor, while the contractor knows exactly what to do.
When it is a good idea to follow the fixed price model?
Let’s figure out two basic issues related to the fixed price model planning:
The contractor’s side. There is a lot of situations when the client is not sure about his project details, or how to describe them in a clear and transparent manner, not to mention the content of the brief content in order to make it at least useful for the development team.
The client’s side. In the perfect circumstances, the client has to know exactly, what should be in his or her requirements list. In other words, every detail of the project is documented up to minutes. Note that once the contract is approved, the client has no room for adding new project terms on the current conditions. The client has to be able to provide exactly what the end product he’s expecting, and understand when the project should be “done” and what stands behind this word.
With KeyUA, the client can be patient, as we know how to show our value: we’ll bring a comprehensive list of questions, related with planned project. Thus, we can simplify the required planning process as we get the key information, which entails a properly fixed cost.
What to expect from this model?
It could be better if we’ll take a look at a good example of a fixed price model, that suits well: let’s assume that the project’s scope is neat, specific and relatively small. Something pretty simple, with defined list of features and workflow. In this case, the client can easily provide all details and requirements in a simple manner. If the client can provide designs it will also simplify development planning.
Fixed price may seem like a perfect pricing model for such state of affairs, but the reality can be stickier than it seems. This model is only favored in case if the client spent a lot of time to get all the information required and he or she’s sure that this information is 100% correct. In order to save time, the client can hire a developer, who will help out with the information collecting, but the effort is still can be appreciable.
In case of lack of information or misinformation, the client will be forced to ask for revisions, which can slow the whole process.
Fixed price model is good to go for smaller projects. It can be suitable for larger projects as well if the client can split it into small, clear and informative milestones.
The pricing model stage is often questionable. If you are looking for an organized development team – drop us a line and tell us about your project, so we can switch from theory to actual practice.