Fixed Price vs Time and Materials: which Price Model right fit for your Offshore Development

To clearly serve offshore outsourcing software development, agreements or contracts contains certain price models. These models help the analyst team to consider the pros and cons and decide which model will work best for them. The software development platform today is getting tough competition from offshore software development companies. The offshore software development company in India is also a major presence in the race. As any of them offers major fluctuation in the payment or time frames, sometimes it gets tough for the client to make choices. In this article, we will closely learn about two different price models i.e. fixed price model and material and time model.

A glimpse of the fixed price model

If your project is small or medium-sized, then fixed price model is beneficial. In order to support this model, companies are hiring offshore developers or better say, the best offshore developers. Under this model, the requirements are made clear and details regarding the project are specified beforehand. Any last-minute changes are not entertained as the timelines are strict.

When to consider

Before software development outsourcing you will have to consider certain factors. For this follow the following guidelines-

• When your project is settled in a distributed environment where everyone has access to the information.

• When you have a long term,crystal-clear approach towards the project

• When your specifications are certain and there are no unexpected surprises

Pros:

The fixed price model has certain advantages and bright side. Let’s understand its benefits-

The budget is fixed

In this model, the client is aware of the actual expenses and overall amount that has to be paid before and after the project. This factor is extremely beneficial for businesses that are running on a small budget or on limited funds. If you have a team of best offshore developers then it would not be hard for you to predict the overall budget frame.

Predefined time frame

Once the guidelines are submitted, the development team knows when to finish the project and submit. Contrary to this, the business platform also decides the launch sharing of the product and services. There are other benefits associated with this model -

• It hosts clear requirements and specification

• The customers or users have a comparatively lower risk

• The project can be delivered within the expected time and budget frame

• Working with the offshore software Development Company proves to be cost-effective

Cons

You might have figured out that a fixed price model is not "one fits all" model since it also has some pitfalls. For example, you might feel that lack of communication or flexibility is affecting you or the project -

• It is uncontrollable with IT resources

• Risk factor for a service provider is higher

• Offshore software development services have to be managed by the company itself

Time and materials model

Time and material model is suggested for the project that has long term planning and frequent-changing requirements. If the project also has an unclear scope or any fluctuation in the workload from technicians or development team then and it is essential to consider this model. In most of the cases when it comes to implementing the project,it becomes hard for the customer to stay over the same terms. In order to deal with any sort of uncertainty in the project, this model is recommended. Even in software development outsourcing, it is preferred. If the client wants an agile development process then the Offshore Software Development has to be carried out by potential candidates for project managers.

Pros

As this model has some of its undefined or uncertain possibilities, the doors for advantages are open. If you are attempting to try offshore software Development Company in India then it might trigger certain positive factors for you. Let's learn the advantages of time and material model.

Ample amount of flexibility

This model, unlike the fixed time model, provides flexibility to a certain extent and hence it is extremely convenient. Changes can be done here at any point in order to improvise the solution for service mode.

Billing differently

The time and material model does not poke big holes in the pocket it is profitable for the service providers. The building under this model is done on per hour basis hence no matter the duration of the project; it has to be paid by the client. This model also has certain benefits like-

• This model is quite simple to understand and execute

• It is cost-effective compared to the IT providers

• This model makes it easier to utilize the team for fulfilling different requirements

• Offshore outsourcing software development bears a low-risk factor

Cons

It's downsides include-

The Offshore Software Development Company provides a lack of ownership

• Fewer resources are provided to IT professionals

How to make a choice with the best offshore software Development Company

If you have carefully followed the above mentioned facts then either you are confused or you are sorted. This is actually a vast field but offshore software development India is preferred by most of the companies.

Fixed price model offshore development India

You can choose this model if the below mentioned points meet your requirements:

• If you are so certain about the project that there is no possibility of changes

• If you have limited budget and resources

• If you need a solution soon

Time and material offshore development India

You can consider this model if :

• You cannot predict the possibilities of your project

• If the flexibility of the project is crucial

• The planning of the project is typical

• If there is unconditional faith between the development companies and individuals involved.

Conclusion

The overall motive to choose any of the models is to convert the potential profit. Offshore software development services, in the long run, are paying similar amounts and resources. In order to support the same cause companies are all set to hire offshore developers. The fundamental difference between both of them is predictability or certainty.

A problem solver and a project manager. I am responsible for managing large scale project teams comprising of full stack developers solving complex technological challenges.