Ray Yamamoto Hilton
Freelance Mobile Architect & iOS Developer in Melbourne, Australia

Time and Materials vs Fixed Price

I often get asked why I prefer Time & Materials to Fixed Price, and why it’s better for the client.

The main concern people express are that T&M means that the cost is unpredictable for the client.

A fixed-price project has to try and absorb some of the risk of the project unknowns, the larger the project, the more risk and therefore the higher cost. A way to reduce the fixed cost is to do a lot of upfront plannig (e.g. completed wireframes and designs) so that development can get going with the minimum of ramp up time.

However, any project can start with the best of intentions, the most well-laid plan, the best possible chance of success – but EVERY project changes. Despite the most meticulous planning, changes may become necessary, or change is artificially prevented to keep the project on track. This leads to Change Requests (i.e. financial penalties for change) or delivering a project which is no longer what is needed.

I prefer not to have to say “no” and be able to accomodate new and better ideas to try and make the best possible product within your budget. However, it may not be possible to acheive everything given a limited budget – but we can almost certainly acheive something significant.

Time and Materials keeps the cost down to only the time that is used – the risk is shifted from me to you in exchange for a lower overall cost. Furthermore, control of the project is placed firmly in your hands and not subject to the overhead of fixed-scope contracts or change requests.

Having said that, if you are willing to let go of precise scope, you can fix the time (i.e. the price) and we will work backwards from there to determine a rough scope. Your prioritisation will determine which things are certain to happen, and which will be at risk.