You probably need some kind of web project, but you don’t have enough knowledge to figure out how to make it exactly? You need to have at least a basic understanding of the development process and what features are included. In some cases, a fixed priced contract may be a good choice, but it depends on how detailed is your project specification. If you have the idea and don't want to spend your time and money on the documentation to get your first fixed price quote, the best solution for you is time & material approach.
Why? Because when it comes to software development you can rarely see the whole plan, each and every functionality and features of your application beforehand. With Time and Material approach, the client can control each development stage since he can get his project piece by piece during the estimated time.
It doesn’t matter if you spent a lot of time on the Request For Proposal (RFP), because you may not be able to include each piece of necessary information. Most of the time, when we receive the RFP, we have to ask a lot of follow-up questions. The list of these questions can be even longer than the whole RFP.
Our company constantly works on billing strategy, after years of experience and experiments we figured out that the time and material contract basis is the most ethical and flexible. By following the time and material approach we can deal with most part of projects. The main difference between a fixed price basis is that the client will pay only for actual time spent on his project development.
But what we are talking about exactly?
What is Time and Material Model?
Time and Material is a basic phrase in a contract for project development in which the client agrees to pay the contractor based upon the time spent by the contractor's team. This type of contracts is used when the contractor faced some issues related with estimation or it’s known that scope of your project may be changed in the future, and this may happen multiple times during the development stages. In accordance with the contract, the client has to agree to pay for the materials used, cost of labor, and the work that is done eventually.
The client is charged for drawn up hours required for a project, including costs of materials. Thus, the client can get a flexible contract with the opportunity to add new directions, requirements, add or replace new features, as well as involve users to understand the status of the product.
When it is a good idea to use a Time and Material contract?
The scope is implicit or not known;
The project is long-term and includes dynamic requirements;
The client wants to have the opportunity to make changes in the scope and workload.
How you can benefit from Time and Material?
With Time and Material contract the client getting the next advantages:
Flexible development process. Businesses are able to modify the dynamics of a work process, revise designs, change or replace features in accordance with the implementation.
Dynamic work scope. This point may be essential when it comes to larger projects. The client wants to achieve a specific goal, and the full understanding of how it will be achieved exactly is not so important. Some mid-sized companies or startups are looking for the way to make a decision during the process, evolving or changing the strategy, etc. That’s where Agile methodology comes to play.
- Good timing. The fact that the client excluded the fixed-price bidding basis helps a lot with saving time on development start due to the fact that you'll get minimum paperwork and get a Proof of Concept as fast as possible. Furthermore, with blended rates, a client can see how much time is spent on one or another commit or feature, so he will know how to motivate the team to work with the highest efficiency.
During considering the foregoing Time and Material model, it is important to weigh all the advantages and disadvantages of such an approach and how it can fit in your project. Facing some issues while making a decision on the pricing models? Drop us a line, we can provide brief recommendations on your project.