Fixed Price Approach

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How can you benefit from it?

Fixed price contracts are pretty common. We can find countless cases where the client wants to get a strict plan on a strict budget.
The main conditions to follow

In order to follow the fixed price model in the best way possible, the following should be true: The project has a clear and transparent scope, and the client (as well as the contractor) knows exactly what they are responsible for, and know each other’s abilities, competency level, and efficiency.

These conditions make it a win-win situation for the client and the contractor. The client thus feels confident about the contractor, while the contractor knows exactly what to do.

When is it not a good idea for the fixed price model?
Let’s look at two basic issues related to fixed price models:
The contractor’s side
There are a lot of situations where the client is not sure about the project details, or how to describe them in a clear and transparent manner. Sometimes they are unable to give an understandable description of the content to help guide the development team.
The client’s side
In perfect circumstances, the client knows exactly what should or should not be in their requirements list. In other words, every detail of the project is documented. Note that once the contract is approved, the client has no room to add new project terms under the current conditions.
Wrapping up

The fixed price model works well for small, clear projects. It can be suitable for larger projects as well, provided the client can split the project into simple, clear and informative milestones. However, there are many factors that can render fixed pricing suboptimal, and repercussions can be felt both in the eventual price and the speed of project development.

If you are looking for an organized development team – drop us a line and tell us about your project so that we can put your idea into practice.

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