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Time and Materials vs Fixed Price
According to the technology and skill level of the team working on a project, as well as the amount of hours the resource team spent working on it, you are charged under a time and materials contract. All pricing models will include charges for software licenses and comparable expenses. The time and money spent on T&M, however, will be calculated based on the resources needed to create each user story. The key benefit of a time and materials contract is the freedom to modify your needs, replace broken components, and change directions because resources and deadlines can accommodate modification requests. However, if the IT project takes twice as long as expected, the development costs may also double.
Fixed Price project is a single-sum contract where the service provider agrees to complete your project to an agreed sum set for a fixed specification that is set out before development can start. It is the right choice if you are sure your requirements are all cut and dried. Are you absolutely clear on what is the scope of your project? Probably you have an in-house IT team that will help create the complete specifications.
The development methodology is so very different for these two models that any comparison would be like comparing an apple to an orange. Both are delicious of course but they are completely different fruits.
If you are still in doubt about outsourcing your software requirements while keeping to your budget, this might be just the time to talk to our team on your requirements and costing structure. We have a proven track record built over 18 years of successfully building and maintaining projects for our clients, globally.