After founding Solidstudio, Pawel was an originator in terms of pursuing expertise in eMobility. With the build-up of a solid knowledge-base on industry’s needs & wants, he now keeps a close eye on products’ development. He’s also hugely responsible for the business’ side and designs the business models for our products.

Paweł Małkowiak

Time & material and fixed price contracts are the two main types of agreements in the world of IT outsourcing. Which of the two is used for a project is determined on a case-by-case basis, and depends heavily on software development requirements and the allocated budget.

So how does each work, and which one is right for you? The best 

 will be able to advise on what type of contract is best suited to your software solution. However, it’s important to understand the workings of each agreement independently too. In this article we take a closer look at how time & material and fixed price contracts work in practise, plus the pros and cons of each to help you make an informed decision.

Time & material vs fixed price: How does each agreement work?

A fixed price contract is a single-sum agreement, meaning a software developer completes a project to an agreed overall cost and deadline. The cost is calculated based on an estimate of labour, taking into account the level of seniority of developers involved, and time to completion.

A fixed price contract works particularly well when a project has very clearly defined objectives, wireframes and specifications. The end goal is realized from the start and communicated in detail to a software developer in order to achieve the correct outcome. The success of a fixed price agreement relies heavily on there being no confusion from the outset as to what the end product should be.

In stark contrast, a time & material contract involves a project being broken down into smaller deliverables, with regular payments made as each section is completed. Unlike a fixed contract, time & material agreements offer a lot of flexibility when it comes to adjusting requirements and shifting specifications to meet market demands. For a more detailed overview, don’t miss our dedicated 

Time & material vs fixed price: Pros and cons

With the two agreements offering very different options, it may seem like identifying which one a project needs would be obvious. However, it’s not as clear cut as things might seem. Often IT services offer a hybrid option, using both agreements to help fulfill a client’s needs.

There are clear benefits and disadvantages to both these methodologies, let’s break them down to help you decide the burning question: time & material vs fixed price?

: A fixed price contract comes complete with an overall cost to get a software solution developed from start to finish. This can be hugely beneficial when managing budgets.

: A fixed contract requires detailed specifications, with which a software developer can calculate a very strict progress timeline and deadlines.

: With a clear and detailed vision of a finished product and when that will be realised agreed at the start, a fixed price contract lessens the risk of any surprises during or after the product has gone live.

: The software developer is in no doubt of their objectives, and the client knows the exact cost to be paid – all parties are aware of their obligations from the start.

: The finished product is a result of exactly what was agreed at the start of the contract. While amendments can be made throughout the project’s development, any additional work can prove timely and seriously affect deadlines. This type of contract makes adjusting to changing demands in the market extremely difficult.

: In order for a software developer to realise a client’s vision accurately requires a lot of in-depth planning – anything less can lead to errors. Objectives should be clearly defined and any potential issues flagged in order to ensure the finished product meets clients’ expectations.

: A fixed price contract limits options to scale the development team working on a project should a new deadline be set. What might seem like a small, simple change, could potentially cause problems for the dev team and delays to the overall deadline.

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Advantages of a time & materials contract:

: Unlike a fixed term contract, a time and materials agreement breaks down a project into much smaller deliverables, meaning it can easily be adjusted along the way, with features added or removed to meet the customer’s requirements. This agile methodology is particularly beneficial for startups and mid-sized companies, where decisions can be made throughout the process, and strategy and software services can be built simultaneously.

: The nature of this kind of agreement always results in regular testing and multiple iterations of a product, which makes for a more superior final outcome. /li>

: Clients are given a clear hourly rate to which developers are working, plus access to a time log so budgets can be constantly monitored.

: The time and materials model allows clients access to every stage of development and a project’s progression, with any quality IT vendor presenting regular reports on work completed.

Disadvantages of a time and materials contract:

: Probably the biggest disadvantage of this type of agreement. However, while at first glance a time & materials contract removes an element of control of the overall cost to the client, its agile approach means the remaining scope is constantly adjusted and measured.

: In order for a project to be fully realized requires a lot of input and involvement on a client’s side to make sure the vendor is working towards delivering set objectives. Alternatively, it can be an excellent idea to hire a dedicated Project Manager or Business Analysts as add-ons to the development team to cover this risk.

: The flexibility of a time and materials contract is a great advantage, but it also brings risk if stakeholders add new features and deliverables to the project. It can easily lead to losing the bigger picture and can result in missed deadlines.

: As a time and materials project evolves, it might come to be that initial plans and requirements are no longer relevant. If that’s the case, a client should be open and willing to adapt ideas in order to meet market needs. This can well work in a client’s advantage, as it may become clear along the way that the scope is smaller than originally planned and fewer developers are needed to bring a product to market. Luckily, development teams like Solidstudio are used to working in ever-changing environments and will be fully supportive and understanding of such situations.

As you’ve seen above, there are clear advantages and disadvantages to both time and material and fixed price contracts. Which best suits your project ultimately depends on how rigid its requirements are. As a general rule, a fixed price contract is best suited to projects with a limited or fixed budget that has very clear requirements and strict deadlines. Whereas a time and material contract lends itself perfectly to a start-up or business where system requirements are vague.

That said, having extensive experience with both fixed price and time & materials contracts, here at Solidstudio we pride ourselves on being as flexible as possible when it comes to helping clients realize their goals. For more information on how a time and materials and/or fixed price contract and how to get the right contract for your project, contact the Solidstudio team here.

Pros and cons of Time & material vs fixed price contracts.

T&M contract in IT outsourcing: How it works

The ever-evolving nature of software development can often make setting a fixed price for work impossible. Much like the IT products being developed, pricing models need to offer a high level of flexibility for if and when requirements change. This is the main reason time and materials contracts have risen in popularity in recent years. Often referred to as T&M, a time and materials contract model works out the overall cost of a project based on the time spent on the work carried out, plus any materials used.

But how does that translate in the world of IT outsourcing? In this article, we take a close look at exactly how a time and materials contract works, plus what types of projects it is best suited to.

Time & Materials contract: How does it work?

A time and materials contract is based on the number of hours a developer spends on a project (according to a pre-arranged hourly rate), plus any materials (eg software licenses) used for the duration of said work.

The key to a time and materials contract is flexibility – it can evolve alongside a project, and easily be adjusted as and when requirements change. The level of control this type of agreement offers to both clients and vendors is what makes it such an appealing option.

A highly agile-orientated workflow, time and materials contracts can be hugely beneficial, ensuring cost-efficiency, transparency, and timely delivery of the task in hand. However, this type of agreement requires a level of trust from both parties in order for it to work successfully. Vendors must be transparent when it comes to time spent on a project and regularly update clients with costs incurred, and clients must always be present to discuss requirements and approve decisions, as well as pay the agreed rate. Needless to say, picking the 

In practise, a T&M contract will include milestones of product delivery, all of which are defined and agreed by both parties. Here’s how a time and materials model works at Solidstudio:

The size of the project is initially assessed, before being broken down into small deliverables, each of which will be estimated and carried out subject to a client’s approval.

Developers, UX designer and Project Managers at Solidstudio work at fixed hourly rates of between $40-75, based on their level of expertise, skills and qualifications. Staff best suited are assigned to a project, with the hourly rate communicated to the client before any work is undertaken. Each month, a worklog and invoice according to the specific developer’s hourly rate is sent to the client.

Solidstudio works in agile iterations of two weeks, presenting progress to clients at the end of each iteration. In addition to this, the Solidstudio team also hosts recurring planning sessions with clients to track and measure performance.

Time & Materials contract: When should it be used?

While it might seem like a time and materials contract is the perfect pricing model, it’s not always the best solution. As a general rule, time and materials contracts are most suited to projects, where the scope of the project is initially hard to define or can be subjected to a change. T&M is perfect for when there is no clearly finalized product, and when there is no easy way to divide the project into smaller parts. This contract type lends itself in particular to:

Projects with undetermined or vague specifications

Start-up businesses, with no exact, predefined goal

Projects that need to quickly react to market trends

Outsourcing a development team to work side by side with the internal IT department

Whatever software development you might require, it’s always best to check all pricing options available. For more information on time and materials contracts and how they work, contact the Solidstudio team.

Time and materials contract

True cost of software outsourcing - how can you meassure this?

Software development outsourcing is the term used when a technology company is hired to create and build a business’ IT systems. A hugely beneficial practise, outsourcing in this way can help small to mid-sized companies in particular not only gain a competitive edge, but significantly reduce costs and implementation time.

While the premise of software development outsourcing is quite simple and its benefits clear, finding a reputable company to deliver such services can be a challenge. Google ‘software development companies’ and the result is seemingly endless pages of vendors offering their services at competitive rates. So how do you know which of those developers will properly fulfill your needs and offer true value for money?

Knowing what to expect from a vendor, from both a service level and cost perspective is vital before choosing the best 

 for your business. There are a number of considerations that will help you identify a reputable software development company, all of which are detailed here, plus how much you should expect to pay for such services.

Software development outsourcing: What to consider

Outsourcing software development involves a significant level of trust from both parties to work successfully. More often than not, a business will have to share confidential and valuable data in order to get the IT systems it requires. Any reputable software development company will understand this and offer a service that not only meets a brief from technological perspective, but a human one too. To find a tech partner who will do just that, look out for vendors with the following attributes:

 – A reputable software development company will be sympathetic to their line of work being highly specialised, and will therefore help clients form requirements, ask difficult question and make sure all parties are completely clear on the business’ objectives

 – Making sure a software development company has the right skillset to fulfill technical requirements is vital, as any gaps in knowledge could lead to costly delays. A close look at a vendor's portfolio will give a good indication of whether the team possesses the correct skills, across the most relevant technology.

 – The more senior a team, the more business-orientated it is. A good way to gauge experience levels is to look at ‘Meet the team’ pages and see what percentage senior developers account for.

 – While a project might need multiple developers input, it’s a good idea to choose a vendor who will assign developers to one project at a time. Not only will the sense of ownership help increase a developer’s output, but means each project has one firm point-of-contact.

 – Any software development company worth it’s weight will help a client see past the ‘now’ with any technical requirements, and offer the expertise to scale a project up or down as needs and situations change.

 – Developers are in high demand globally, but that shouldn’t mean waiting long periods for projects to get off the ground. At Solidstudio, development can start in a matter of weeks, with the initial planning phase up and running in a matter of days.

 – A quality software development company will stay in regular contact with clients for a project’s entirety. At Solidstudio, weekly and biweekly calls are standard practise. Clients are also invited to join internal communication channels and are welcome to dial into daily standups if they so wish.

 – The last but one of the most important considerations of all. A quality software development company will be completely transparent at every stage of a project’s progression. From planning and implementation, to costs and potential issues, any work completed should be visible to the client, at any point. Be wary of talk of or signs of further outsourcing from within the vendor – this is also a major red flag.

Software development outsourcing: How much should it cost?

So now you know what to look for in an outsourcing software development company, the next big question is how much should it cost? Giving an exact figure here is almost impossible for two main reasons; firstly, because every project will have different requirements. And secondly, creating a digital product is a process of constant change, and therefore an estimate provided at initial contact stages could easily change (sometimes significantly) as the project evolves.

In order to get a realistic estimate, the best first step is to spend a good amount of time considering what your product requirements are and drawing it up into a project specification document. This should broadly outline how the required software should function, in both the short and long term, which will help vendors understand what level of work and seniority is required. It will also help avoid any misunderstandings in the development cycle and costly delays.

After sharing this document and an initial consultation with your chosen vendor before any work is carried out, you should expect an estimate based on an initial assessment of how much work is involved and the level of seniority it will require. Solidstudio has a track record of smaller end-to-end software development projects over a three-month period, as well as bigger, on-going projects and so can quickly offer very accurate initial estimates. These would include costs for:

It is worth reiterating costs can (and almost certainly will) change as a project evolves. Be wary of low estimates, cheaper estimates don’t necessarily offer the best value, and can often include hidden costs that soon add up. Reputable software development outsourcing companies will be completely transparent when it comes to costs, keeping clients abreast of any changes, and ensuring to check before undertaking new work that might add to the bill.

 is often best suited to IT outsourcing. This pricing method means fees are configured based on the amount of time spent on a project, combined with the cost of the effort (materials) used in the process. Solidstudio works to an hourly rate structure of $40-75, depending on the level of seniority required, with management overlay kept to a minimum.

For more information on software development outsourcing, or for an estimate, contact the Solidstudio team!

True cost of outsourcing - how can you meassure this? Read our article to find out.

Software development outsourcing: what to consider and how much does it cost?

The key to success in developing custom software.

Being an eMobility leader in various projects across multiple startups, Piotr was responsible for OCPI and OCPP integration as well as EMP and CPO platforms development. With extensive expertise in the open standards field and eMobility tech solutions, he is leading teams of experienced developers and contributing with invaluable knowledge and experience.

Piotr Majcher

 is one of the most demanded services today. Organisations that want to gain a significant competitive advantage and boost their operational efficiency invest in tailor-made software solutions that meet their needs better than off-the-shelf software.

Developing a bespoke solution takes place during five different stages where development teams first engage in business discover, proceeding to design, development and quality assurance, and launch. The first stage is critical here - that’s where software development companies get to understand the needs of their clients and can propose solutions that address these problems.

But to ensure that your bespoke software development project is successful, there are some things you should know.

At Solidstudio, we have a lot of experience in designing

for our clients. Over the years, we’ve developed a range of processes that help to make development smooth and successful.

What are the key benefits of bespoke software development?

But first, let’s see why so many companies are investing in bespoke software solutions. Here are the benefits custom-made software brings organisations.

Access to cutting-edge technologies - considering the pace of technological development, it’s rare for software vendors to accommodate all changes and trends immediately. Custom software development takes advantage of the most recent innovative technologies to bring you the most up-to-date solution.

Scalability - a custom software solution can grow together with your business because it’s easy to scale it to match new requirements. A software company will not only build your solution but maintain it in the long run, ensuring that it scales to support your growth.

Security - a solution available on the market and used by many businesses is an easier target for hackers. A Tailor-made solution will address all the vulnerabilities specific to your business systematically, protecting your business against cybersecurity threats.

Cost efficiency - a customized software solution is designed to work with the software you have. That means you won’t have to invest much in extra hardware - while that’s often the case in licensed software.

Easy integration - organisations often use multiple off-the-shelf software solutions to match their needs. But using several programs at once in challenging in terms of procurements, licensing, and maintenance. By developing a single tailor-made solution, businesses can integrate various processes into one tool.

Support and maintenance - a custom solution comes with reliable technical support and product maintenance plan. The development team that has developed the product will help you resolve any problems quickly and efficiently.

Bespoke software development - how to do it right?

To maximize the ROI from a bespoke software solution, organisations need to have an in-depth understanding of practical problems they want it to solve. Having a strategic vision of the solution is essential to ensure that it perfectly matches a company’s needs.

To start a software development project, organisations need to team up with a trustworthy and experienced custom software development company. It’s important to choose a reliable tech partner who has experience in managing such projects and excellent track record of implementations.

Successful bespoke software development requires smooth cooperation between the development team and the client. Regular communication is paramount here. That’s why it’s best to choose a company that has communication tools and processes in place to support such collaborations.

Are you looking for an experienced software development company to help you build a bespoke solution? Get in touch with us; we have the skills and know-how you need.

Time&Material vs Fixed Price

30 JULY 2020 • 12 MIN READ