Fixed Price vs Time & Materials: Which Contract Fits
The contract should match how much you already know. Wrong wrapper, and both sides start playing defense.
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When fixed price is fair
Use fixed price when the slice is small, the inputs exist, and “done” can be demoed in a sentence. A landing page with a known CMS. A well-specified integration. A contained MVP after discovery. If you cannot write acceptance criteria, you cannot honestly fix the price.
Fixed price on an unclear product is not cheaper. It is a dispute scheduled in advance.
/ Dimitriy Caliber
When T&M is the adult choice
Time and materials fits discovery, R&D, and products that will change after the first user interviews. You buy a team and a cadence, not a frozen scope. The control is not a lump sum. It is a weekly demo, a cap, and the right to stop. That is more honest than a fake fixed bid padded with risk.
Hybrid that actually works
Paid discovery, then a fixed first release, then T&M for iteration. Or a monthly retainer with a named backlog. Founders like the certainty of a number. Teams like the honesty of hours. The hybrid gives both — as long as change requests are written, not whispered in Slack.
- Fixed: clear slice, clear done
- T&M: learning, change, research
- Hybrid: discover, lock v1, then iterate
What to put in writing
Who approves work. How unused hours roll. What happens if a third party is late. Who owns the code and the accounts. A contract that is silent on those points will be loud later. Keep it short. Keep it specific.
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