As a buyer of software, you primarily pay for the work performed, i.e., the number of hours developers invest in creating your solution. The billing approach varies and here we will discuss fixed and variable pricing, as well as the retainer model. Different pricing models suit different companies, and the choice may depend on the solution to be developed.
A fixed price is exactly what it sounds like. Together with your software partner, you agree on the price for your solution in advance. This is done after estimating the number of hours required to produce a finished product. If you, as a customer, opt for a fixed price, it's crucial to understand that the project scope is essentially set from the beginning. Fixed price equals fixed scope. Therefore, making significant changes along the way without those changes affecting the agreed-upon price is challenging.
Payment is divided into several instalments during the project, often based on predefined milestones or on a monthly basis.
When it comes to fixed pricing for a software solution, it becomes even more critical for the software partner to make an accurate estimate of the project, both for their own and the customer's benefit. At Meta Bytes, when agreeing on a fixed price, we recommend a thorough feasibility study where we go through everything with the customer. The customer should therefore expect a more comprehensive feasibility study from our side with fixed pricing since the project takes a more direct route from point A to point B. Here, we don't take the "scenic route" that software projects otherwise often do, where you discover and explore more along the way.
If you and your software provider agree on a variable cost, you pay for the work performed by developers and other team members. To provide an approximate price, an estimate is made based on the known conditions and requirements, but this is only an estimate and not a maximum limit. You often can agree on a maximum budget or specify in the contract what happens if unforeseen events affect the initial estimate. Typically, you are then invoiced for the total number of hours the development team worked during the last month.
At Meta Bytes, we view our estimate as a recommended budget we provide to the customer. A budget that allows for taking the scenic route during the project, giving you the opportunity to explore possibilities you hadn't initially considered. It might take a bit longer than we first thought, but it will be worth it.
In some industries, such as consulting services, it's common for companies to use the retainer model. An agreement is reached on a fixed, usually monthly, cost and the customer then has access to a certain service or expertise during the specified period.
There are different types of retainer agreements that sometimes include a certain number of hours each month, but they can also cover specific advisory services. Retainer agreements are most common when the customer and the provider have a long-term partnership and trust each other. It often involves continuously improving an implemented solution, providing both security and flexibility for both parties.
When we develop software for our customers, we always focus on quality and sustainability – we deliver amazing tech with damn good business impact. We work hard to meet the unique needs of every company, and our expertise, experience, and commitment are reflected in the price. This means you don't have to compromise on anything. Software development is a future investment in your business, and we ensure you get the best possible solution. The pricing for your specific project is determined together after examining what you need.
(Plus, we're pretty fun to work with, and that's hard to put a price on!)
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