Fixed-Bid Vs Time and Materials

There are two main ways we structure projects at Bixly depending on our clients’ needs. Andrew and Cris talk about the differences between these two ways of structuring development work. This conversation covers they types of projects each one is suited for, budgeting for each, planning for each, and ultimately setting our clients up for success at launch.

A fixed-bid project is one in which the requirements, timeline, and cost are all defined. The goal is to have as much as possible known up front and we deliver at two or three-week milestones. Time and materials, on the other hand, is where will bill hourly for work. As Andrew says, “We do fixed-bid if it’s a project with a set list of requirements, it has a budget and a timeline. If you say, ‘I need a developer for six months to come alongside my existing team,” we would do that as time and materials.” Time and materials is extremely flexible while a fixed-bid project is extremely predictable. Often times, time and materials (or staff augmentation) is a great fit for clients who are debating whether they should hire someone internally for their project. Here the staff augmentation model shines, because often times there’s a broad range of skillsets that need to be applied to the project and we make it easy to pivot people on and off your project as needed.

We help our clients determine which is the right fit for them in our earliest conversations. If a client says they need a project delivered at a certain time, then that’s fixed-bid. Time and materials isn’t designed to deliver a product at a certain time; it’s designed to provide you with as much development bandwidth as you need. Or, if a client says they have a set aside budget for custom software. That’s a good fit for a fixed-bid project; not as good a fit for time and materials. On the other hand, some clients may already have a team of developers who are really busy but they are eager to get started with another initiative on their software. They want extra hands ready to be productive on day one. That is a really good fit for time and materials. This also allows for flexibility on the project planning, usually working and planning in two-week sprints as we iteratively work on the project. We still help you identify priorities and make estimates along the way to ensure that your project is well planned and you can budget accordingly.

In reality, we usually end up doing a hybrid of the two. Most frequently we create an MVP using the fixed-bid model to completely plan out that project, refine the ideas, and execute. This usually takes about three months. As our client takes their MVP to market and to investors, we then switch to time and materials to continue development in a much more agile fashion, responding rapidly to customer feedback. We continue to support and develop on the project in this way for as long as our client needs that work done.

Every project is different and we find that these two general models for project execution serve the varying needs of our clients. If you are ready to start developing today, and you’re wondering which model is best for you, set up a free consultation on your software today!