Fixed-price vs hourly billing: why we only do fixed-price and what that means for you

When we tell clients we work on fixed-price projects, the first reaction is usually skepticism — how can you know the price before you build it? Here is our answer.

The Problem with Hourly Billing

Hourly billing misaligns incentives. The agency earns more when work takes longer. Clients carry all the risk of scope creep, estimation errors, and inefficiency. A project quoted at 200 hours can easily become 400, and the client has no recourse.

In practice, hourly billing also leads to poor scoping. If the client is paying by the hour anyway, there is less pressure to define requirements precisely upfront.

How Fixed-Price Works in Practice

Fixed-price requires a detailed scope document before work begins. We spend significant time in discovery — understanding the business, mapping user flows, identifying edge cases — before we quote. The quote covers exactly what is in the scope document. Nothing more.

Changes outside scope are quoted separately, in writing, before implementation. This is not a gotcha — it is a discipline that protects both sides.

When Fixed-Price Does Not Work

Exploratory R&D work where requirements are genuinely unknown. Early-stage products where pivoting is expected. Projects where the client needs to change direction frequently.

For these cases, we recommend a retainer or time-based engagement. Fixed-price is for projects where what needs to be built can be clearly defined.

What This Means for Clients

You know your total cost before you commit. Budgeting is straightforward. There are no surprise invoices.

The trade-off: you need to be more deliberate about requirements upfront. Changes after scoping cost extra. But in our experience, that discipline leads to better software — because everyone is forced to think clearly about what is being built before building it.