Let's say you decided to create a software product
without having your own developers. Therefore, you could use some help from the
third party contractor. And the good question to ask would be how to pay for
the service. Should it be the Fixed Price or Dedicated Team model? Or Time
& Material? Each project is unique, so there is no perfect solution.
The Time & Material model requires a
separate consideration, so we’ll cover it in the next article. Meanwhile, you
can explore the comparison chart with all three models right here.
1. Fixed Price
It is useful:
- For the short-term projects.
- When you
have a complete description of the project, with clear objectives, workflow and
- When the product’s
requirements are fixed and stable.
- When working
with the new contractor (the pilot project with a fixed rate would be a great
way to test your potential partner).
Price requires thoroughly drafted specifications. Of course, you could slightly modify the
requirements, so the product meets its purpose. However, we dissuade
to try changing everything halfway through the project, because it most likely
will fail some deadlines along with the planned launch date.
force majeure circumstances, we define if the product’s current version changes
are essential. If the client insists on modifications, but the deadlines should
remain the same, we have the only one solution – toss some of the current tasks
2. Dedicated Team
It is useful:
- For the
long-term projects, when the current development plan includes bringing in some
additional resources and /or the new technologies.
- When the
original needs and goals are unclear, like in a startup.
- When the
customer knows beforehand that requirements would be frequently modified (since
you're using a dedicated team, it would be easy to change tasks and priorities
in a snap).
advantage of the Dedicated Team is that you have a whole team at your disposal:
the service provider takes care about the infrastructure, administrative
support and specialists, and you have the right to determine the development methodology, technical platform, and even
corporate culture and policies.
on suitable model for you, we advise discussing your case with the contractor.
find it smarter to start from the Fixed Price and then move to the Dedicated
a non-biased information,we also
discussed this issue with our experienced developers, worked in both dedicated
team and projects with fixed rate. And here’s our summary:
Dedicated Team Pros:
people need to have clear working plans, so they prefer the stability of
working in a dedicated team.
- The model
allows the developer to get a deeper knowledge of the project’s technologies
and work with them more effectively, considering software's architecture,
communication with the customer or his representative is a mandatory requirement
for such projects. It evolves the developers’ communication skills and improves
the mutual understanding between the client and the team.
Dedicated Team Cons:
project usually comes with the more and less interesting tasks. As a rule, the project
updating and supporting isn’t the most entertaining task available. For
example, one of our teams used to spend more than 20% of their time on the
technical support of the various customer projects.
- As any
dedicated team is a “company within the company”, the team is a subject to all of
the customer’s processes. Sometimes these processes differ from usual ones in
their company. Each particular specialist adapts to the new conditions
differently, so it could be a problematic issue.
- The dedicated
teams usually work with the simplified specifications, which gives the
developers some room for creativity and new solutions. However, each idea must
be first agreed with the product owner or client, which requires being
persistent in decisions.
Fixed Price Pros:
people, on the contrary, enjoy changes. Each project requires studying new
technologies, approaches and solutions. Moreover, the fixed deadline is a bit
challenging: it dares you to deal with the problem as fast as you can.
- The clear
specifications provide a better look at the project.
- A new
project (e.g. startup) might consider the technical solution proposed by the
developers separate the product into the individual tasks already at the project
assessment stage, so the customer could see the workflow ahead. The dedicated
team is doing the same thing during the course of work on the customer side.
Fixed Price Cons:
- In such
projects, developers rarely interact directly with the customer. Typically,
they communicate through a project manager, so he or she is responsible for the
effective dialogue. On the other hand, the developers don’t have to distract
themselves from tasks to join the daily conversations.
Price projects aren’t flexible, because this model doesn't provide an effective
way to manage the risks quickly. Budget issue is also there, but it's not a
In the end,
the same features of the different models might be considered as pros and cons
at the same time. Therefore, we strongly advise to find some of your precious
time for dialogue. Consider all the nuances, think the project through and make