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What’s better hourly payment or a fixed price?

There are two ways for customer to pay for work: fixed and hourly. Many customers prefer fixed payment because they are afraid that hourly they would be counted more hours and thus would have to pay more. But it’s not. To figure out what payment method to choose lets consider the differences between them.

Fixed payment

Developer would never work in negative, thus determining the amount of the fixed price he would take into account several extra hours in case of force majeure. Newer the less most often the work is done without these extra hours, thus the payment would be more than the hourly payment might have been.

Before calculating a fixed payment, all stages of the project, their complexity and time, spent on development, have to be determined. It comes out that any details that customer wants to add or change would be extremely difficult to do, as the budget have 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 someone calculate the cost of such a project, it’s just a lie.

Setting a fixed cost for a project could lead to very long negotiations and bidding that would delay the start of work and consequently the project would be delivered later.

Hourly payment

Pay hourly 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 no brief or misunderstanding of work scope and budget.

The first stage of the assignment has to be agreed before the 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 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 always aware about the stage of development and know 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 to have as a result or he 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 with 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 which stages are not approved yet or for projects where customizations or amendments are often needed, hourly payment would be the best choice.

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