Fixed Price vs Time and Material: Choosing the Right Pricing Model
TL;DR The fixed price vs time and material decision is the first major commercial agreement in any software development engagement, and the wrong choice creates problems that neither party can fix once the project is underway. A fixed price contract for a project with evolving requirements locks the client into a scope that does not match reality. A time and materials contract for a project with a defined output leaves the client exposed to budget overrun without a ceiling. According to McKinsey’s research on large software project outcomes, 45 percent of large IT projects exceed their budget, and 7 percent …
