How Does Fixed Price Web / Mobile Outsourcing Work?
March 2nd, 2017
One of the ways to develop your IT project is Fixed Price. This is a contract based on a fixed budget, therefore, you’ll pay the mutually agreed amounts regardless of the number of hours worked.
However, there is a catch. It may take longer to make sure you're completely on the same page with the developers and they know exactly what you need. Otherwise, you might end up with less functionality than what you had expected or it might cost more than you mutually agreed upon in the beginning.
Share the details of your Project and we will create a pre-estimate. This is how you will know the approximate cost and length the future Project will take. We can sign a Non-Disclosure Agreement (NDA) before you share any details with us. The more details you provide the more precise will be the quote.
Finally, if you are okay with all the preliminary details, there is the contract to sign and off we go!
Technical Specification (TS)
This document lists and describes all requirements that the finished product must meet. Terms, budget and the structure of the Project are all fixed in the TS and all changes can be made only in addition to this document.
If you have a technical specification ready - great! If you don’t have it prepared beforehand, we can do it for you. We charge extra for technical specifications – US $500 and takes 2-3 weeks for the preparation. The complete technical task includes a detailed description of project’s full functionality.
Keep in mind that the fee for the technical task is a stand-alone fee and does not affect the price of the project itself.
Planning
Next, we plan features' timeline - when everything should be done. Since every feature was already described in the TS, what is left is to separate the tasks into sprints (or also called "iterations") that typically last 2 weeks. The length might vary for various projects, but two weeks is the most convenient period of time during which features can be developed and implemented.
The team holds a meeting to discuss the tasks for the upcoming iteration and at the end of each iteration, you, as the client, are shown a demo of all that was done during the sprint. If you are okay with everything, then we go on to plan the next sprint.
Payment can be done in increments when a full sum is divided equally between the iterations, or it can be a down payment first and then the rest of the amount after the project is done.
When would Fixed Price be an appropriate option?
- If your project scope is clear and well defined in detail
- If you don’t need much flexibility with the project scope
- When you want simplicity regarding required project documentation, (i.e. not needing to review project task details to validate the hours worked)
- When you want to determine a precise budget in advance
When is a Fixed price not appropriate?
- When you have an idea, but not a clearly defined plan of what you want exactly. There is no wiggle-room in Fixed price compared to Time&Material or Dedicated team models of cooperation.
- When you want flexibility to introduce new features (for example, if you have learned that your target audience likes Facebook more than Twitter, while previously, all your interactions were Twitter-focused)
- When you want flexibility with how much you want to spend (and when).
Check out Time&Material and Dedicated Team ways of cooperation for more information.
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