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What’s better hourly payment or a fixed price?

Nikita Trofim
Commercial director
03-08-2020
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There are two ways for customers to pay for work: fixed and hourly. Many customers prefer fixed payments because they are afraid that if they were paid hourly, they would be counted for more hours and thus have to pay more. But it’s not. To figure out which payment method to choose, let's consider the differences between them.

Fixed payment

The developer would never work in the negative, thus determining the amount of the fixed price by taking several extra hours into account in case of force majeure. The newer the work, the less often the work is done without these extra hours, and thus the payment would be more than the hourly payment might have been.

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Before calculating a fixed payment, all stages of the project, their complexity, and the time spent on their development have to be determined. It comes out that any details that the customer wants to add or change would be extremely difficult to do, as the budget has already been approved.

In order to calculate a fixed price, it is necessary to have a brief. It is impossible to calculate the cost of a project accurately and correctly without its basic parameters. Even if someone calculated the cost of such a project, it’s just a lie.

Setting a fixed cost for the project can lead to very long discussions and bidding, which will delay the start of work and the release of the project.

Hourly payment

You don’t need to have a brief because you can add additional items to your project or remove items that are no longer relevant at any time. It doesn’t mean that there might be a brief or misunderstanding of the work scope and budget.

The first stage of the assignment has to be agreed upon before work starts. It gives a clear understanding of the scope and time frame; the preliminary indicative assessment is made and documented; and the work is carried out according to it. You only have to pay for the hours that were actually spent on the project, with no extra hours, like in a fixed payment.

The obvious advantage of hourly payment is that the developer constantly provides the customer with information about the work done, and the time spent on it. Thus, the customer is always aware of the stage of development and knows if there are any problems.

Hourly pay is better for long-term projects that require time-to-time customization. In such situations, it would not be necessary to evaluate the work each time, but simply to pay the spent hours at the established rate.

When a client doesn’t know what he wants and, as a result, has new ideas in the working process, it is better to choose hourly payment. Since the developer won’t want to make any changes to the project within the approved budget,

Thus, fixed payment is better for projects with clear frames, such as launching a site, writing an article, or creating a banner. For projects whose stages are not yet approved or where customizations or amendments are often needed, hourly payment would be the best choice.

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