Do you already have experience with inflated valuation and problems with adapting the product to the current market, and so on? We know that your budget is not infinitely flexible and you care about the most optimal payment solution.
1.Kinds of pricing models
The most commonly used models are the Time & Materials model and the Fixed Price model. Both are associated with other requirements and benefits, which I will describe below, but first you should consider:
1. How much do you want to participate in the creation process?
Sometimes people have specific requirements and don’t have time to control the whole process.
2. How clear is your idea?
If you know exactly how your project should look or work, and you have a really good specification, you can choose the Fixed Price model. However, if you don’t – the companies can suggest different solutions or you can choose the Time & Material model, which allows you to change your mind whenever you need it.
3. Complexity of the project.
If your project does not require creating a lot of features, special effects and very complicated structure and it is quite simple and easy to predict, you can choose the Fixed Price model. Otherwise, the more complex project is more difficult to estimate and predict. In those cases, the companies often take into account the safety stock.
4. Your competence.
When you don’t have the necessary knowledge to realize this kind of project and only a specialized technical company is able to implement your idea – you can choose the Fixed Price model. In the other case, with the Time & Materials model, you can cooperate with the software house and collaborate to bring the idea to life.
2.Time & Materials
Our company used to do our projects using the Scrum methodology, which basically means that we worked in biweekly or weekly sprints. This is aTime&Materials option and it works really well for startups, especially when the idea is not completely clear.
The benefits for you using this solution directly are the following:
- You have flexibility in changing the requirements,
- You have higher transparency and may keep an eye on the development process,
- You pay only for working hours,
- You can start your project right now 🙂
- You can test your project in the time of creation and you can fit it to the current market
What are the disadvantages?
- You don’t know until the very end of project how much it will cost. Nevertheless, we have to say that in many cases, the Time & Materials model is more profitable for the client than the fixed model,
- It depends on the case, but sometimes the implementation process in agile style may be longer than in Fixed Price model because of the larger amount of changes.
Another option is “Fixed Price”. We deliver the complete project in a pre-scheduled timeframe. This is better option when you know exactly what your expectations are and what features need to be created.
The requirements and the benefits for you are the following:
- Your budget is fixed,
- You don’t need to control the project while during development,
- You know exactly what results are expected,
- Sometimes, the execution time is shorter than in T&M model.
What are the disadvantages?
- There are precisely specified project requirements that cannot change (or the change must be made via Change Request basics),
- In many cases, the cost is higher than in the T&M model,
- Your product will not be flexible in relation to the market,
- You have to pay for additional changes and features.
Now you know what the characteristics are for T&M and Fixed Price models!
Choose the best solution for you and your idea!
If you are more curious about what our workflow standards are, you may check it out on http://octivi.com/how-do-we-work/.