Hourly Rate vs Fixed Price - Right Way Of Selecting Vendors
Hourly Rate vs Fixed Price - Right Way Of Selecting Vendors
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Hourly Rate vs Fixed Price - Right Way Of Selecting Vendors

It’s easy for any business owner or startup person to be curious about knowing how to choose vendor in a right way? The person who is posting his project has a big dilemma about hourly rate vs fixed rate and how to hire a developer as a non-tech founder who is perfect suited for your project.


It takes great effort to write a good post to attract top talent and to get them hired at a reasonable budget. But then comes a question about price structure. Generally there are two price structure i.e. hourly rate and fixed price. Initially you can hire a vendor at fix price for smaller task and eventually move to hourly rate.


Fixed price project is a bad idea in early stage business space. When you decide each specification about the project even before it has started, you need to be serious about it and list out features wisely. Once project gets started you can not add any features or cannot change the way of project by any means. You should put trust on your technical team and give some freedom to work to make the project better than earlier.


Hourly rate vs fixed price - pros and cons

Project risk for a owner


Perfect and long-term estimations are almost near to unimaginable to make – there is a first-rate summary of the motives here;


  • When you sign a contract, you're dedicated to the connection for no less than the period of the first milestone. It’s more difficult to track progress, and you're supposed to check the deliverables on milestone handovers only.

  • It’s big risk for you than it is for the agency – generally, they are more experienced with copying with assignment risks and making sure that contract protects their rights.


You can change direction of project anytime


There is much less authorized back and forth, considering the fact that the deal is beautiful simple, and the contracts are usually short and understandable. You can lower your expenses with the aid of using a template, with little risk. Priorities can consistently change, and you don’t ought to set them in stone before the project kicks off.


Have you ever had an important client or investor meeting that steered you must change the path of the project? No crisis. Let’s stop what we're doing now and begin doing the essential things right away. This is possible only because you have not created features list initially and are free to add or remove any functionality from the list as per your requirements.


Hourly rate vs fixed price - project priorities

From the very first day you sign a contract, the vendor you have chosen start working on project with a basic thought to complete it in a very less time. At last, vendor’s profit is only influenced by the number of hours they put into the project, as it costs you nothing. Running between this, developer do not give more quality time for your project whereas you want your project some quality time to be given in order to get the best output.


If you need to align your priorities then hourly rate is the better option in comparison to fixed price. It allows you to track your team’s work hourly and you can get your project done efficiently.

Hourly rate vs fixed price - Which one is cheaper?

The agency or vendors need to study about project failures in a fixed price. Hence you do not get lower price in reality, rather than safe side for the company. When you deal with a company who have proper plan and strategy for implementation of the project then you have to pay for the actual work and experience. You just have to discuss whether listed feature is feasible or not, if not then there is no need to waste time.


Suppose there comes something in between of project that can take more hours then expected, at that time if the price is fixed you as a owner is benefited. Because you just have to pay for the project to get done and not the extra time they have worked upon.


Hourly rate vs fixed price - when to use and why?

Hourly rate scenario


We’ve just acknowledged the predicament when all necessities are handy to recognize and no changes are anticipated in a while. But let’s face it – this would happen seldom in a trade truth. It’s more likely to have a talk on every side of project development and continue this discussion until the very finish of production.


Projects which go good with this model:


  • The idea of the app shouldn't be well-defined but, so it’s rough to estimate the software progress rate.

  • The developers will work on difficult tasks requiring thorough checking out and the purchaser’s approvement.

  • The patron prefers to participate within the product discussion on each and every stage of the project development.


Fixed price scenario


As a customer, you must keep in mind that any of your requirements are not going to be modified throughout the mission – they’re affirmed within the constant rate contract. This is one other rationale to be completely definite about product features.


And we must mention that fixed price project is all times a risky matter. You see, while you maintain strict cut-off dates, some thing will absolutely go fallacious. To get things back into average, all risks are incorporated in app development rate.


Projects which go good with this model:


  • Your idea of an app is lovely simple, without complex tools to put in force.

  • You've got a excellent document with the record of requisites – no questions to ask, no feasible alterations to make in future.

  • All that you just need is a prototype or an MVP – just to have a usual vision of your product.


Hourly rate vs fixed price - Final decision

It seems like we discussed almost all possibilities with both hourly rate and fixed price scenarios. All you can do is to think about our project requirements and read above points again to make a perfect decision.


If you wish to have a expert advice about this, SkyWave Infotech can help you out in selecting right vendor. Let us know your doubts or share your idea at [email protected] to hire our experienced team for your project.


We also provide custom mobile app development services, web app development services at both hourly rate and fixed price scenarios. Reach us for more info and we would be glad to work with you.


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