Fixed-Bid vs Time & Materials
Fixed-bid is a single agreed price for a defined scope; time and materials bills hourly with no fixed scope or price ceiling.
Definition
Fixed-bid puts the risk of going over on the agency: if it takes longer than estimated, the agency eats the cost. T&M puts the risk on the client: every extra hour is an extra invoice. Most agencies prefer T&M because it removes their downside; most clients prefer fixed-bid because it caps theirs.
Why it matters for your business
T&M engagements routinely run 2-3x the original estimate because there is no incentive on the agency side to finish. Fixed-bid forces the agency to scope honestly upfront and stay focused once work starts. The trade-off is less flexibility mid-flight.
How we apply it
We default to fixed-bid for everything under 12 weeks. The price is set in the proposal, the scope is set in the proposal, and changes go through a short change-order conversation rather than an open meter. T&M is reserved for genuinely open-ended discovery work.
Related
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