Time and Materials vs Fixed Price vs Dedicated Teams: Your Gainful Engagement Model

Choosing the correct engagement model for your project is one of the most critical early decisions you should make. It will shape your entire product, from how it’s built to how it’s used and even down to how much time and money it will take. The right engagement model can also give you value by allowing you to increase your productivity and efficiency while reducing the costs of hiring.

You can lose a lot if you don’t use the right engagement model. For example, you’ll lose your app users, who may wait a long for updates. The project can also lose money if it turns out that there’s not so much work to do to hire a specialist for full-time in-house instead of using the Time&Materials contract. Finally, you’ll lose time figuring out what works or doesn’t work for you if you don’t study everything carefully before starting the work process.

In this article, we will discuss different engagement models, their pricing, and the advantages and disadvantages of each. ProCoders will also guide you in selecting a suitable project model when choosing between the Fixed Price model vs Time and Material vs Dedicated Team. Before diving in, let’s consider what an engagement model is and what a suitable model you should look for to make your application development successful.

What Is An Engagement Model?

A client engagement model is a detailed plan of how a vendor will work with its clients to produce software. The engagement model considers the client’s needs, wants, and interests, as well as ensures a certain level of control over flexibility in terms of responsibilities.

There are many engagement models, since outsourcing software development doesn’t have one way of working. Usually, companies choose between Time and Materials contract vs Fixed Price vs Dedicated Team model. It’s important to pick the right kind for your goals so that all parties can benefit by achieving common outcomes and adopting suitable pricing models as well.

When choosing an engagement model, the key factors to consider are:

• The level of risk you are willing to take.
• The complexity of the work.
• The time required for delivery.
• The budget allocated for the project.

How Does it Look Like the Right Engagement Model for Your Product Development?

To ensure that you choose the right engagement model between a Fixed Price contract vs Time and Material vs Dedicated Team model, list your project’s needs and consider how they apply to each option:

• Budget. Decide if you need to fit into a strict budget or can afford to extend the budget if required. The Dedicated Team and Fixed Price models require a fixed budget, while the Time and Material model allows a flexible budget.
• Flexibility. Choose if you want to be able to make flexible decisions or change project requirements during product development. If you expect that you’ll need to change a project or add something, you better choose Dedicated Team and Time and Material models because your team can’t make any changes in the Fixed Price contract.
• Time frame. Should this project be completed as soon as possible or within a specific time frame? If so, how soon would you like it to be finished? If you plan that your project will be developed for a long time, then a Dedicated Team and Time and Material models are most suitable. When work on the project should be done in the short term, the Fixed Price model will be an excellent choice.
• Project management. Do you have the expertise to control application development by yourself or prefer to entrust it to a third party? If the vendor carries out the management, it’s about the Fixed Price model. With the Dedicated Team model, you can choose which party will take over the management of the project. Still, with the Time and Material model, everything is usually on the customer’s side.

	Dedicated Team	Time and Material	Fixed Price
Budget	Fixed	Flexible	Fixed
Flexibility	Can be changed/added	Can be changed/added	Fixed
Time Frame	Long-term	Long-term	Short-term
Project Management	Customer/vendor	Customer	Vendor

Pricing Engagement Models Overview

Fixed Price: Pros and Cons

We at ProCoders recommend this model for small and medium-sized software projects. If you choose this one, you should be familiar with the project requirements, scope, and deadlines that may apply to your project. Before starting a project, outline how you plan to carry it out and calculate the costs involved.

While client involvement is not a criterion of this model, it is necessary to have the vendor’s opinion. If you have no experience evaluating the price of custom software development to clarify project risks and costs, it is better to entrust this to the company. For this, ProCoders offers a Discovery phase to evaluate these components and draw up a roadmap for the development of your project. 

Pros: 

• there is a minimal chance of error since the project is carefully defined before
• this model stays within budget
• also, no client supervision is required, and this model could give 100% accuracy when all parameters are set

Cons: 

• The project requirements should be stated clearly to ensure everything runs smoothly
• You can’t make last-minute changes
• This is not a flexible model, and it’s impossible to add anything later
• It requires a lot of discussions and meetings before you embark on the project

Time and Material: Pros and Cons

Time and Materials is a model for a healthy relationship between client and vendor through continuous communication. Changes to project specifications can be made anytime without affecting the schedule. Both client and vendor mutually agree upon how much time to dedicate to arising tasks. ProCoders recommend this engagement model for ongoing projects.

When choosing Time and Materials, you should remember that this model is also well-suited to projects involving game development, IoT applications, and AI software development that requires constant modification as the project progresses.

Pros: 

• Extremely flexible and dynamic
• Granular monitoring makes it feasible, especially for agile methods
• The client can validate the product as it’s being created, ensuring that innovation and quality are upheld throughout the outsourcing software development projects.

Cons:

• lower control over the budget
• High-risk factors and last-minute changes can delay the completion date
• the need for being much more involved than in other engagement models

Dedicated Team: Pros and Cons

This contract eliminates the flaws of the other two engagement models. It offers many features, and you can modify or pay the most attention to the most suitable for your needs. 

Also, it is one of the most adaptable business models for a long-term software development company project with changing requirements. Furthermore: with the Dedicated Team model, you can avoid recruitment costs. How? 

When you want to hire a dedicated team, you go to your outstaffing vendor, who already has screened, assessed, and interviewed professionals onboard and is ready to gather a team specially for your project. This way, you don’t need to pay for job postings, screening tools, recruitment work, etc. – the interest a vendor akes is already included in your project cost, and believe ProCoders, who are one of such outstaffing vendors: no hidden hiring costs are included there!

Pros: 

• The client gets a team of experienced and skilled resources long-term from a reliable outstaffing vendor company
• The model tracks the status of a project and adapts in real-time to changes in workload or updates from management
• considerable savings – human resources and infrastructure
• The client dictates resource allocation, deadlines, etc.

Cons: 

• The client should have considerable planning for the process with task allocation for team members. 
• if a client has no vision or clarity, they will have difficulty getting their team to work well
• differences in opinions may arise when having both in-house and dedicated developers

For you to avoid all these cons, the ProCoders company offers its services:

1. We offer the Discovery Phase service to deal with development planning and understand the milestones needed and their cost. ProCoders help our clients if they have no vision or clarity of the project: we determine its goal, describe its development step by step, and then our Dedicated Team can start the development itself and support the project before, during, and even after launch. 
   We also offer the Outstaffing service of professional developers who can quickly join the team, understand their tasks well, and speed up the development process.

2. There are no problems in communication between our developers and clients. Both in Staff Augmentation and Dedicated Team cases, a client directly communicates with developers as they become a part of a team. However, considering a Dedicated Team, a client can also order a dedicated project manager to help them with everything. At the same time, a client will still have full control over the project.
   All ProCoders employees have good business ethics. Before hiring an employee, we always check the English level of our candidates, so that their language skills correspond to the client’s expectations.

Difference Between Fixed Price, Time and Material, and Dedicated Team Models

Pricing

In the Dedicated Team model, pricing is fixed for each team member by monthly payments. In the T&M model, you pay after an agreed-upon increment of work delivered, and the payment is based on the agreed hourly, daily, or weekly rate. In the case of the Fixed Price model, as it is noticeable from the name, pricing is fixed for a project, and you pay for the whole project after the final product is delivered.

Involvement In The Process

Considering the difference between Time and Material and Fixed Price, in an FP contract, you participate in initial meetings when you clearly define the scope of a project and the needed features. Then, the team mostly won’t need your involvement – you’ll see a product when it’s finished. In a T&M outsourcing model, you start faster, but then you (or someone from your company) are often involved in the whole process by participating in meetings and giving feedback on finished features. 

In the Dedicated Team model, you can control the entire application development process from beginning to end and be fully involved. 

Project Suitability

A Fixed Price contract doesn’t fit well with projects with high complexity since it’s hard to determine all the requirements precisely from the beginning. Complex projects go better with the Time and Material model, and it’s the best variant compared to the Dedicated Team and Fixed Price models.

Product Quality

Working with the Time and Materials model gives you more chances to create a high-quality product, as this model is better than the Fixed Price. The team tests and improves a product in a few iterations before releasing it to users. While in the Fixed Price model, since your budget is fixed, the team may not have so many opportunities to es the product before giving it to you. The more tests, the higher the additional cost. 

Speaking of the Dedicated Team model, where you pay monthly, you can have as many tests as you need. The main thing to remember is that the time spent and the project cost will increase if you decide to run too many tests. Because of that, hiring professional QA specialists who understand what they do and know how to test your project is important.

Impact On The Project And Change Requests

Change requests are inevitable during project implementation if you choose the Dedicated Team model. Working with the T&M model, you’ll be able to make changes, but the last-minute ones can delay the completion date, so it’s not your story if you want to stick to all deadlines. In the Fixed Price model making changes is possible only after project completion.

How Can ProCoders Help You Pick The Right Pricing Model?

If you contact ProCoders, we will do everything to make it easier for you to choose the suitable engagement model: Time and Material vs Fixed Price vs Dedicated Team. You will have the opportunity to speak with the ProCoders Founder, an entrepreneur and a startup-friendly person interested in fruitful cooperation with all customers. He will help you and give you accurate advice on choosing the suitable model, taking into account all your project needs, expertise, geolocation, time frames, budget size, and other nuances that influence the choice of model.

ProCoders also offers its clients the Discovery phase service. We will make a development plan for you considering what we have mentioned above: your project needs, expertise, geolocation, time frames, budget size, etc. After that, you will get a ready-made roadmap for your project with the best model budget and financial proof. 

ProCoders try to estimate the cost of a project and other details like deadlines, scalability, making required changes, etc. We always plan to aim for 100% accuracy as much as possible.

Conclusion

In this article, ProCoders have considered features and differences of the Dedicated Team, Fixed Price, or Time and Material engagement models. When choosing, you must always consider these main components:

• budget
• flexibility
• time frame
• project management
• expertise
• geolocation

Speaking about the project fit, ProCoders found out that:

• the Fixed Price model is appropriate for small and medium-sized software projects;
• the Time and Material model suited for short-term projects and separate tasks;
• a Dedicated Team model is one of the most adaptable engagement models for long-term software development.

Speaking about the differences between firm Fixed Price vs Time and Materials vs Dedicated Team, they are measured under the following key parameters:

• pricing
• involvement in the process
• project suitability
• product quality
• impact on the project and change request 

ProCoders is always happy to help you choose the right Fixed Price, Time and Material or Dedicated Team model by talking to the company’s founder and through our Discovery phase. We will develop a project development plan for you and consider all the nuances, including the possibility of incorporating contract staffing into your project staffing strategy.