This contract specifies business and technical requirements, product
release date, and the overall cost. Since the key priority is to
meet these terms, it’s very important to prevent various issues -
extra work, prolonged stage approval process, etc.—that may lead to
delivery delays and budget overrun.
Therefore, correct estimation and task planning are critical
elements of success. So, define the app/website goal, prepare a
detailed technical specification, create mockups and wireframes.
As it’s difficult to do without specific background, consult IT
experts: business analysts, project managers, engineers specializing
in the necessary field (if you need, for instance, a blockchain
solution for an insurance firm, turn to a
custom blockchain development company
that has already helped underwriters accomplish their business
When concluding a Fixed Price contract, the following issues can
It’s difficult to alter the scope as it leads to changes in the
agreement and increased time-to-market. “Why should I discuss new
terms and revise the agreement?”—you may ask. Developers can offer
meaningful suggestions, for instance, recommend adding a new
feature based on early user feedback or using innovative
technology to obtain a better result.
An IT company has to deliver a specified work scope on time and
budget. If something goes wrong, the process is prolonged due to
fixing problems. To meet deadlines and fulfil the contract,
engineers can less focus on Quality Assurance or other critical
activities. Hence, the end quality may suffer.
Sometimes challenges arise regardless of the team’s
professionalism and efforts. For example, the key specialist may
get sick. Surely, an IT outsourcing service provider will soon
replace it but a new team member will need some time to
familiarize itself with the project.
The final price is often higher compared with other software
development pricing models as engineers have to prevent risks
associated with a budget overrun in case of changes. That’s why an
IT service vendor often raises the end cost by 40-50%.
Strict deadlines, finalized price, and complete predictability are
the primary benefits of a Fixed Price contract. Since everything
from the scope to time frame is specified, you don’t have to
participate in the app/website development process. You receive the
product done exactly how you wanted. However, it may not be the best
digital solution that you could get.
Choose a Fixed Price model when:
You need to build a website or application within a certain budget
and time period.
The project is small or medium-sized: the implementation will take
less than two months.
There is a clear technical specification. The more details you
provide — mockups, roadmap, functional and nonfunctional
requirements, etc. — the better.
You are not going to be involved in the process, checking each
task, making suggestions, and approving each iteration. The
priority is to completely delegate software-related activities to
professionals and get results.
What do you pay for:
the exact work specified in the contract between your business and
an IT outsourcing company.