Fixed price or time and materials: What’s best for your web project?

Written by Keith Devon on May 15, 2018

What is the best pricing structure for a web project? It’s a question that comes up again and again.

What is the best pricing structure for a web project? When running our WordPress agency a question that comes up again and again.

The primary concern is around risk, but the choice also has other implications on a project. What we’re looking for is to find a structure that minimises potential conflicts and risk, in a win-win situation for both client and developer.

In this article, I’ll examine the two most popular pricing options – “fixed price” and “time and materials” – from the clients perspective. We’ll look at the pros and cons of each, and some of the factors that make one more suitable than the other.


Choose a fixed price if the project is small and the requirements are known. Large, flexible projects can benefit from a time and materials contract.

Fixed-price contracts

What is a “fixed-price” contract?

A fixed price contract, also known as ‘project-based’ or ‘flat-fee’, is one where the total cost of the project is agreed in advance – before any work takes place. Another definition, this time from Wikipedia, states:

A fixed-price contract is a type of contract where the payment amount does not depend on resources used or time expended.Wikipedia | Fixed-price contract

Advantages of fixed-price

Fixed-price contracts are often favoured by clients because of the perceived reduction of risk. The price is agreed up-front, along with the specification for the work, transferring the risk of delivering the project to the developer. If the specification of the project takes longer than expected, the developer absorbs the impact.

Disadvantages of fixed-price

The reality of most web projects is that clients don’t know if they have asked for the right thing until they see it built and can actually use it. Therefore the biggest issue is usually around project scope and change requests.

When to use fixed-price contracts

Fixed-price contracts are ideal for the following projects:

Time and materials contracts

What is a time and materials contract?

[a project] in which the employer agrees to pay the contractor based upon the time spent by the contractor’s employees and subcontractors employees to perform the work, and for materials used in the constructionWikipedia | Time and materials

Also known as a ‘cost-plus’ or T&M, a time and materials contract is where a client agrees to pay for the time and cost of materials involved in the completion of the project. The time-based cost will be based on a contractor’s rates, for example, a day rate or an hourly rate. The “materials” cost will be the expenses incurred by the developer during the project, for example, software licenses, domain name registration, photography, etc.

Advantages of ‘time and materials’

The main advantage of a time and materials contract is that it allows for flexibility in the project.

More often than not, as a project progresses new ideas, previously unconsidered issues, and uncommunicated assumptions will arise. A time and materials contract is built to be flexible enough to handle these scenarios.

Disadvantages of ‘time and materials’

The most obvious disadvantage is the risk that the project will be much more expensive and time-consuming than anticipated.

When to use ‘time and materials’ contracts

Time and materials contracts are ideal for the following projects:

A hybrid approach

It’s possible to mix these two models in a hybrid approach. For example, maybe the design or prototyping phase of a project needs the flexibility of a T&M contract, but, once the design is complete, the development phase can use a fixed-price.

Or perhaps, part of a project is integrating a “Service A”, which the developer has done time and time again, but they also have to integrate “Service Z” with which they have no experience. The developer might suggest a fixed-price for the integration of “Service A” and T&M for “Service Z”.

Other pricing models

‘Fixed-price’, ‘time and materials’, and ‘hybrid’ aren’t the only pricing models. There are also:

These additional pricing models are explained well in this article.


Fixed-price or time and materials? Which is best for your project?

As always, it depends on your individual circumstances and experiences of commissioning web development.

In our experience, the flexibility and agility of a T&M project usually leads to the smoothest relationships and the best end results. However, some projects and clients are well suited to fixed-price, so we’ll use the model that is most appropriate given the circumstances.


If you have any questions on the best model for your project or if you’d like to discuss the ideas in this article, email me at keith[at this domain] or tweet @keithdevon.