Developing a project is not an easy thing. But preparing for development and setting it all up might be even harder. One of the biggest challenges clients face up with is selecting the pricing plan. Today we will tell you the pros and cons of three most popular ones and will provide you with a universal recipe of how to choose the right one.
Okay, what price models exist?
There are a huge amount of price models out there, but when it gets down to software development majority of companies, and Rubyroid Labs is not an exception, limit to 3 main options:
- Dedicated Team
- Time & Material
- Fixed Price
Let’s learn more about each of those, their strong and weak points.
Model 1. Dedicated Team
Full Dedicated option is probably the favorite one among members of Rubyroid Labs Team. It basically means that developers you employ become for some period of time members of your Company and totally focus on your needs and problems. Usually payment is done per month, which means that Dedicated Team Model suits best for long projects. This approach is based on time, not scope, which makes it great for Agile methodology, where scope is evolving.
Among main advantages of this approach are:
- Team can totally focus on your problems
- Team commitment will skyrocket
- Team will know bests all specifics of the project
- All members work together during long time, which increases productivity
- Easy to plan budget
Among rare cons of this approach is that it wouldn’t probably work for really small projects or improvements that can be done within a few days. For such cases it is better to take Time & Material Model.
Model 2. Time & Material
Time & Material Model is also quite popular among software companies. Its basics look pretty much the same as the ones of the Dedicated Team. The main difference here is that you don’t necessarily employ members for the whole months or week, but simply pay for the time them spending working for you. It allows you to be a little more Agile, but on the other hand increases headache of planning the resources. Since now it can be the case that 1 developer is working time& material on a few project, so the necessity to negotiate the priorities might arise. Still this approach also works great for Agile methodology projects.
Main advantages of this approach are as follows:
- Team can focus on solving the issues and delivering high quality products
- You can handle the budget on a more detailed level
- Works even for really small projects
- Decreases cost risks from both sides
- Allows space for easy change requests and improvements
Two models described above are based on the thesis that you pay for the time spent, not for the scope listed. If such approach doesn’t work for you, it might both thinking of a Fixed Price Model.
Model 3. Fixed Price
Fixed Price Model is based not on what time is spent for development a feature or a product, but on the scope. The obvious advantage of this approach is that you pay for result. But when it gets down to reality, it turns to be deceptive. Fixed Price model can be used only for Waterfall methodology projects, which means all requirements need to be written beforehand. Fixed Price models relies heavily on initial estimates, which boosts the risk of increased cost and not hitting the deadline. So if you go for it, make sure it is reflected in your marketing strategy.
Final price for development via Fixed Price model might be higher than via Dedicated Team or T&M, since one has to cover the risks that something won’t go as planned during the development. Besides, it leaves no room for improvements and change requests. All of them need to be logged separately, which also increases the bureaucracy.
Still Fixed Price can be advantageous in the following cases:
- Small waterfall projects
- Small improvements that are easy to estimate
- Better control over budget if no change requests appear
We, in Rubyroid Labs, though advise to use this approach only when minor projects are done, since it puts focus from delivering high quality product to meeting the deadlines no matter what and doesn’t allow controlling scope well.
Which one to choose?
So which one should I choose? Here’s our secret formula:
Taking into account these four factors, you will be able to choose the plan that suits you best. We organized all data in a grid, so that it is easier for you to compare it all.
We hope now you will know how to choose pricing model. Also you can try our Ruby on Rails Development Pack Trial. If you are still in doubts, let us know! We will be glad to help you!
Questions? Comments? Let’s talk about them in the comments section below.
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