How to Choose a Working Model: Fixed Price, Time & Materials, or Dedicated Team

When choosing a collaboration model, it’s important to consider the nature of the project and the interests of the client and team. Fixed Price means a fixed budget and a pre-agreed scope of work. With Time & Materials, the client pays for actual labor costs by the hour. With Dedicated Team, the client “rents” a team of specialists and pays each one a monthly salary.

Each model has its own pros, cons, and areas of application. For example, a Fixed Price is suitable for small and medium-sized projects with clear requirements and a short deadline, where the budget and deliverables are limited. The T&M model is convenient for dynamic projects with flexible requirements lasting six months or more. The client has the flexibility to adjust the scope of work as the project progresses, which is important when the final product is uncertain. A Dedicated team is needed for large projects lasting a year or more, when process control and rapid resource expansion or contraction are required.

Characteristic	Fixed Price	Time & Materials	Dedicated Team
Project Size	small	medium to large	large
Duration	short	medium to long	long-term
Flexibility	changes are impossible	quick adjustments during the process	team adapts to evolving tasks
Requirements	clearly defined upfront	can be clarified along the way	can evolve throughout the project
Cost	fixed	hourly	fixed monthly team rates

When to Choose the Fixed Price Model

If the project is simple, with a pre-determined scope of work, a guaranteed price is required. This is suitable for small IT projects, out-of-the-box solutions, or government tenders with tight deadlines. It’s important for the client to plan the budget in advance, as a fixed price guarantees a guaranteed budget.

However, with a rigid specification and a fixed launch date, any changes will require a contract renegotiation, and an incorrect estimate will lead to delays or time overruns.

When to Choose the Time & Materials Model

If the project is large and innovative, with a high degree of uncertainty and likely changes in requirements. This is suitable for startups and R&D projects where flexibility and rapid MVP implementation are essential. The client and contractor work iteratively, based on actual hours completed. This is convenient when it’s difficult to estimate the full scope in advance, but there is trust in the contractor.

Constant monitoring of expenses and progress by the client is necessary, and inexperience leads to inconsistencies and heated disputes over what and how many hours have been spent. In the T&M model, the client remains involved and adjusts priorities, while the final cost “fluctuates” with the scope. Experts note that this approach reduces project stress and allows for faster market adaptation with short iterations.

When to Choose the Dedicated Team Model

When a permanent and manageable resource is needed. The client “rents” developers, testers, and managers at a fixed monthly rate. This model is suitable for long-term projects with complex architectures that require team upscaling. The client gains control over the team and manages tasks themselves, and the contractor provides infrastructure and support.

Responsibility for project management rests with the client. However, this model promotes the contractor’s involvement in the project’s success.

Project Examples

Marine Platform (T&M).

The client, a maritime satellite communications provider, commissioned the development of an IoT SaaS platform for fleet optimization and remote vessel monitoring. We collected vessel condition sensors, GPS and weather data, and 3D deck modeling and provided visual reports and predictive analytics via a web interface.

The project was iterative with frequent refinements. The platform increased fleet efficiency. The MarineFields project won the prestigious SMART4SEA E-Navigation Award 2020.

Educational SaaS Platform (Dedicated Team).

We were tasked with rebuilding the Skillus web application for online courses and training. Our team created user flows and interfaces for three roles: administrator, teacher, and student. We prepared over 100 ready-made UI components and created prototypes for each role to ensure intuitiveness.

As a result, Skillus received a fully functional LMS. It became a powerful course builder with a block editor, flexible student interaction settings, and a user-friendly interface. The dedicated team model ensured continuous development and thorough requirements analysis.

Bank cashback app (Fixed Price)

A mobile app for cashback accrual on bank cards had to be developed within a tight deadline. The scope of work was clearly defined. The app needed to include card registration in the loyalty program, viewing partner stores, and creating directions to them.

We completed the project on a fixed-price basis. The app securely registers cards in the program, displays a list of participating stores, and provides directions to them. Users receive a simple tool for cashback within the agreed-upon development cost.

Risks and Control

Each model involves risks during the planning, development, and handover stages of the project. For example, with Fixed Price, the risk of underestimating at the outset can lead to cost overruns or poor quality. In T&M, without strict control, the hour count rises and the volume of work increases. Ultimately, a balance must be found between risks.

Characteristic	Fixed Price	Time & Materials	Dedicated Team
Budget Predictability	budget known in advance	budget fluctuates with scope	fixed rates, scalable resources
Risks	all risks lie with the IT company	shared risks	stable team

Fixed Price removes financial uncertainty from the client but transfers the risk of underestimating the project to the contractor. Time & Materials offers flexibility but requires client involvement, and Dedicated Team provides a reliable staff but requires the client to manage the team.