Fixed cost or hourly model for your app?

Manish Jain
Manish Jain, Co-Founder & Managing Director at Konstant Infosolutions
Published on Jan 24, 2017 in App Development
Fixed Cost or Hourly Model -Which One Is a Better Choice for You Konstant Infosolutions

Most businesses looking to develop a mobile app aim at getting the right approach up early to assure success with their mobile app development endeavor. With this, the decision they take in the beginning matters the most. And one such decision is making a choice between the mobile app development models that perfectly fit your bill.

And this choice is mostly between the Fixed Cost and the Hourly (time and material) model. For your perception of the solution to be technically interpreted and put into practice well, it is important that you or the mobile app development company analyze your requirements and preferences well in advance in reference to different factors, approaches and traits of development that these models have to offer. The mobile app development company Konstant Infosolutions believes that when edifying the development roadmap and deployment of the execution plan, it is important that you learn about what these two models are about and how they are different.

Here, as you talk with the developer, you tend to develop deeper perspectives about your product. This gives you an idea of different facets of development that would be routing you towards a final product. How you infuse and collaborate your app ideas with the right technical choices and make it reach a profound and clear picture, help you more with selecting the right model, addressing your product value proposition. And most importantly which one will benefit you the most. This is when you actually start getting more realistic and affirmative estimations. And this is how you are able to reach a better set of choices with mobile app development.

Hourly model

In the Hourly (time and material) model, the development is approached on an hourly rate basis. Which means you have to pay on the basis of how many hours your app takes to get developed. If it has taken 500 man-hours to develop and the rate per hour is $20, it will cost you a total of $10,000. By the virtue of its format, time and material offers you a more flexible approach towards mobile app development.

For example, you are looking to develop a mobile app for renting cars and have planned 5 different modules to be integrated within the app. There are about 15 major features that drive the functionality of the app. You started developing the app and in the midway realize that you need to add some more features looking at a new competitor app’s updates related to discount coupons, you need to engage more resources and shift to another plan.

As hourly model follow the Agile approach to product development and breaks the project into sprints, it allows you more flexibility to deal with such mobile app development situations. Further, with the hourly model, you can choose to have more authority in terms of deciding the scope and altering the timeline by adding more resources and skills to your project as and when needed.

This makes time and material more suitable for complex, long-tailed and full-feature apps that are a bit difficult to measure for size and range in the beginning.

By allowing resources to interactively deal with different development proponents and factors, this model stands perfect to deal with undefined and uncertain project requirements. So, if in the process, you come up with some intermittent or sudden requirement to update or implement changes, you can add more sprints and extend your project deliverables with the Hourly model most effectually.

Key points of the hourly model

  • Involves estimated timeline with a flexible deadline
  • Follows the Agile approach to development
  • Dynamically deals with the unanticipated changes and effectively handles sudden requirements
  • The final cost estimations are calculated on the basis of hours spent on the project

When should you consider hourly model

  • When your app idea still needs to be attended and validated
  • When it’s a big project with complexities and uncertain dependencies
  • When defining the project scope and specifications is tough
  • When you want to have a better control over development processes

Fixed cost model

When you go with a fixed cost model you are essentially prioritizing budget over other development factors. This approach confines you to go with pre-agreed project resources and technical provisions for development. This also presumes that as a project owner you would be approving the development requirements in a finely drafted document with all the project related information/references extensively mentioned in it for the mobile app development company.

With the fixed cost approach, you need to just pay a fixed amount that is being agreed upon mutually by you and the developer. This amount could be divided across different project milestones (depending on the size of the app project) with an upfront amount to be paid in the beginning and post-deployment fees settling the accounts in the end. These payments could be driven by different terms and conditions and may involve bonuses and penalties.

Owing to its form and nature, fixed price is best suited to well-defined small-sized projects that are easy to measure and track. Take for example a typical unit convertor app built for one platform or maybe a basic product prototype serving some startup. Going with this approach, you need to make sure there would be no changes or deviations in your implementation and execution plan. You need to stick to a pre-drafted project document and take those terms, instructions and references on building the project, as they are. Similarly, the time and cost estimations would freeze and won’t change as per the changed requirements or modified plans. So, if you get some tweaks and enhancements to be done later, don’t get surprised if you are not attended to be served by the developer, as it is ideal as per fixed cost model.

Key points of fixed cost model

  • Based on static/unbending budget
  • Well-defined, finely-appointed, project details
  • Fixed timeline and non-modifiable project requirements
  • Includes a budgetary cushion on the offer-price

When should you consider the fixed cost model

  • When you have a simple, clear app idea in mind
  • When your preferences and requirements are pre-defined and sorted
  • When you are looking to have a basic app or an MVP or a prototype
  • When budget is the decisive factor

Conclusion

There’s no one-size-fits-all solution to go with all situations perfectly. There are both good and bad sides to both models. It all depends on your situation and your preferences with building the project, as to which model will prove more resourceful in your case. If it’s more about the budget and your priorities are sorted and all your preferences are well-defined, the fixed cost model is a perfect fit for you.

If you are looking to have a better control over resources and don’t want to risk your product quality, limiting it to certain development choices, going with hourly or time and material model makes more sense. If your idea is analyzed well, you can reach the right option most effectively. You just need to identify and sort your preferences and resources in a priority matrix.

Follow the list of pros and cons for both and assign them scores referring to your project needs and development factors. Consult your project with an experienced mobile app development company that will help you reach the right option quite prolifically. Mobile app development experts can even curate and assign custom solutions allowing you to have the best in your bet of needs and choices.

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About the author
Manish JainCo-Founder & Managing Director at Konstant Infosolutions

Manish Jain is the co-founder and Managing Director of Konstant Infosolutions, a mobile app development company based out in India and the USA. Being a technology enthusiast with 15+ experience, his strategic advice and guidance have provided a compe...

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