Fixed price or time & materials: how to choose the model for your project

How the models differ

Fixed price means the client and the vendor agree on the result, deadline and price in advance. Anything not described in the specification becomes an additional agreement. Time & materials (T&M) means the client pays for the hours the team actually worked at agreed rates and manages priorities.

When to choose a fixed price

• The scope is clear: a corporate website, a landing page, a 1C or CRM integration with a known design.
• There is a specification with acceptance criteria, and requirements will not change along the way.
• The budget is approved in advance and cannot grow — for example, under a tender or a grant.

A vendor prices uncertainty into a fixed price, so with a vague specification a fixed price is almost always more expensive than it looks.

When to choose time & materials

• You are building a product, not delivering a project: requirements get clearer after every release.
• The task involves research: AI agents, complex integrations, non-standard analytics.
• You need a long-term team that knows your product and develops it according to business priorities.

To keep T&M from becoming an "endless invoice", agree on 1–2 week sprints, a demo at the end of each sprint, access to the task tracker and a monthly time report.

The hybrid: the fairest option for new products

In practice we often propose a hybrid:

1. A fixed price for discovery and a prototype. In 1–2 weeks we gather requirements, design the architecture and show a prototype on your data.
2. An estimate for the next stage. After the prototype the uncertainty drops and the estimate gets more accurate — as a fixed price again or as a range.
3. Paid sprints. From there the product grows on T&M with transparent reporting.

This way the client does not pay for uncertainty and the vendor does not have to price it in.

What to put in the contract under any model

• Acceptance criteria — how the result of each stage is checked.
• Change procedure — who approves new requirements and their cost, and how.
• Rights to the result — the source code and documentation go to the client.
• Warranty and support — a warranty period after release and an SLA.
• NDA — from the first call, not after the contract is signed.

Templates of the contract, NDA and acceptance certificate are in Documents.

How to estimate the budget

The calculator shows a preliminary budget and timeline range, and we fix the exact figure in a proposal after the brief. It is easiest to start with a 30-minute meeting: we will discuss the task and suggest which model suits you.