11 Sep 2019
So, you decided to implement the planned project. But when you want to understand the cost of work, it all comes down to the question of “fixed or hourly payment”. Why is this important, and what does the development budgeting system affect in general?
The IT services market assessment results show that the average budget that startups invested in development in 2019 is $ 42 000: projects with a fixed payment usually cost from $23 000 to $61 000, the hourly price for specialists of Middle and Senior level varies from 29 to 43 dollars. If the first number can slightly scare young companies immediately, then the second one looks optimistic at first glance. But it only seems so.
Hourly payment: to whom, when, where?
The choice of hourly payment is justified if you currently have a specific pool of work that is very detailed, or, conversely, there is no complete picture of the project in detail. At the same time, the key advantage of the budgeting form is the ability to make changes to the finished product even every day.
But this form of payment is limited by several important points:
- Not all services can be evaluated based on the hourly rate.
For such works as integration or layout, hourly pay is an excellent choice, because the result is known in advance. For design, for example, hourly payment is not the best solution. After all, a brand book developed in an hour will differ markedly from the one spent at least a week on.
- You can calculate the hours of work for individual project stages, for the whole one it is impossible.
Projects that are limited only by the idea, without specifying technical nuances, are perfectly implemented in stages on an hourly basis. And here you can step by step to introduce new proposals, ideas, comments, which will be implemented for $ 35 per hour on average. But how many such improvements can be made before the release, and when, in fact, to plan it?
- The final result depends on the price.
A brilliant idea, an innovative approach and all other attributes of a successful business can fade into the background when you don’t know the exact amount of the project, especially if you need to raise funds from outside.
So, business owners need to be prepared for one of two situations. Either the project amount can increase exponentially if everything is done professionally. Or the product with limited budgeting will be far from the planned one.
To fix or not to fix, that is the question
When it comes to a fixed payment for a project, it is assumed that all work within the SRS will be performed for a specific budget and amount. But an important point is open – the quality of the project.
Key differences of a fixed form of payment
- Either term, or quality, or cost. To implement the whole project based on the rare programming language with the deadline “for yesterday” and of excellent quality for a cheap price is a task from the Grail search category. The customer should understand that only two of the listed criteria can be combined in one project.
- You will get exactly what you have asked about. Fixed payment implies a fixed list of work. If during the development process the business owner wants to make additional functions, requirements or changes to the project, all such work will require more time and allowances for the work of specialists.
- Lack of control over the process.
At a fixed cost, payment is done for the final result. Although interim reports are foreseen within cooperation, this does not give you total control over the process of decision implementation. The customer should immediately prepare that certain stages or work will not be completed exactly as he imagined, even if this does not affect the final result.
So what kind of payment for the project to choose?
If you are focused on quality without budget and time limits, give preference to an hourly based model. In this case, you will be able to control the direction of the project fully and always make timely additions that can significantly affect the final result. This form of budgeting is perfect for innovative projects, where the template approach will be disastrous. Usually, these are complex web services, systems, projects with a creative core.
If you have already thought out the future product in small details, you are sure that the add-ons are not needed, and at the same time you have the time or financial limits – your choice will be a fixed project payment. This form is suitable for boxed solutions with a typical set of functionality and elements. Websites, integration and automation projects with evaluation for results are being implemented project-based.
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