When you decide to outsource your project, most probably, you’ll meet with two pricing models that are used by software development companies – fixed price and time and material. As they’re influenced by different factors and belong to different approaches, the distinction can be confusing and pose a lot of questions.
In this article, I’m going to clear all the information out. How do they differ? What are their pros and cons? And how to choose the one that will be beneficial for you? Also, we’re going to tell you why we prefer a fixed price model over time and material when first time collaborating with a client. Let’s find out which of these two will fit your business.
Two pricing models are used the most by software development companies. These include:
Now that you know the basic definition of these two models, let’s focus on their pros and cons.
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Very often, when people hear the estimate and you think ‘why is it so pricey?’. For this reason, a software vendor will list you what constitutes to this. But for now, we’re going to do it right here.
If you’re looking for a software development company with experience in many projects, you’ve got your match. At Gorrion, we provide you with the best solutions for your situation. We try to adapt the price model to the given project so that it fits you as our business partner and the development team. We strive to always respond to the needs of the given project.
At Gorrion, we care about the transparency of the whole process. That’s why we’re going to give you feedback on every step of the work. Also, we’re going to inform you of the costs and where they come from. In this way, you’re going to have clarity as to what you are paying for, and we’ll be able to adapt the solutions that best suit your needs.
We use both pricing models depending on the situation. When we cooperate with someone for the first time, we build the product on a fixed price model. Later on, in the case when our client comes back to us, we switch to time and material.
Why do we do it this way? Fixed price model simplifies the cooperation due to its orderly manner and sets us off to a better start. It allows us to learn working with each other and develop relations which can turn into long-lasting cooperation. The client knows beforehand what they can expect from us. Thus, later, since they already know the way we work and trust us, we can switch to a less formal T&M model.
Let me tell you a bit about our model – fixed price with a little twist. We encompass all its benefits, which include fixed budget, strict deadlines and predictability. Plus, it’s also flexible since you can make all the necessary changes. On top of that, our process remains transparent, and we continue to work efficiently.
In brief, we first do the essential product and then depending on feedback from tests, we add new parts to meet the needs of the market. Easy, right? And thanks to the static budget, the client from the beginning knows how much money he has to put into the project. Results? The whole operation becomes less stressful for both sides.
Software cost estimations are tricky as they consist of many factors. Before we become discouraged by the numbers, we should know what these pricing models consist of and how do they differ. In this way, we can choose the one that best fits our needs and strategy. With the right company and approach, you’ll reach your business goals and build a product that will bring value to the market.
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