Fixed Price Bids May Appear to Be the Better Choice but May Lead to Unexpected Issues
When planning your website project, you’d like to know the exact price for your final product so you decide to choose the Fixed-Price Model (FPM), also known as “Flat Fee” or “Project-based Pricing”. You start by negotiating the price with your website design and development team then the work begins. Unexpectedly there’s an issue. Oh, oh. Hold on. You assume your developers will just solve it but doing so may require a few more days. However, since your web development partner knows you won’t pay more for fixing the problem, they may either apply a band-aid fix if you’re lucky or simply gloss over it and move on. Additional issues may also arise, but there’s no time or money to work on them.
A fixed price for a website project is a constraint that ties the hands of your development team. It should be expected that client involvement will be minimal during project execution since all the planning was done upfront.
Often times the result is a lower-quality website, unsatisfied stakeholders, poor user experience, potentially lost revenue, and lost opportunities.
The fixed price model is an option for very small projects when the requirements are clearly defined and aren’t likely to change. If you choose the fixed price model, you’ll want to mitigate the risk of unexpected issues and delays by being very detailed when defining the project scope and strictly adhering to the project plan.
Time and Materials for Websites
If the quality of the end product is your highest priority, then you’ll want to choose the Time and Materials Model (TMM) and pay directly for both the time and resources required to create it. Typical resources include subscription services, hosting upgrades, software licensing fees, and rights for stock images. Project time typically includes hours clocked by team members on research, design, programming, maintenance, project managemwnt, team meetings, presentations, and such. Sometimes, the price tag turns out to be higher than originally expected, but you can be sure the result will be worth it in the end.
Your experience will benefit from the added efficiency and flexibility. For websites that include more than a half dozen pages, it’s more difficult and time-consuming to define all the requirements in advance. Such projects are almost always built according to an Agile Methodology, working in short ‘Sprints’. Client involvement and collaboration will be higher for a TMM project.
An agile approach enables you and the development team to quickly react to any changes that were not specified in the original plan and avoid having to re-negotiate the contract.
After the website project begins, do you think it is possible that you will have new ideas or changes that you will want to incorporate? By choosing to pay for time and materials, your development team can start implementing your new ideas right in the middle of development. You’ll want to be mindful of scope creep because how much you pay will depend solely on the amount of time and the materials required to incorporate your bright new ideas into the project to complete the development of your website.
Work for Time and Material website projects typically begins with a retainer that is drawn down on and then the additional work is billed to the client on a monthly basis.