Why the Time and Material model is Best for Software Development?


IIH Global

time and material model

Getting a fixed price for spending a stipulated time on a project - sounds like the fairest deal possible, right? This is what a lot of software development companies believe and thus, they miss out on some amazing benefits.

What we described in the opening sentence of this article is known as the fixed price model. It seems less risky and sets out a fixed amount for the entire project at the initial stage. The traditionalists love it and don’t seem to budge. 

Contrary to this, the time and material model charge based on the actual time spent on the project, commonly known as an hourly basis. From a client’s perspective, this sounds better. However, there are many software development companies that resist this model as they prefer a promised fixed price over a variable pay TronicZone.

The reality, however, tends to be quite different. The time and material model has proven itself to be a better option for the developer community in many aspects. It provides flexibility, value for resources, and a better scope for innovation. Yet, many software companies are unaware or unsure about it. 

In this article, we are going to explore why time and material model is better, more practical, and profitable for a software development company. 

So, fasten your seatbelt. Here we begin!

5 Reasons Why Time and Material Model is Best for Software Development?

1) Your product quality will improve drastically:

If you’ve been a developer for some time, you know that one can almost NEVER predict how long the product development would take.

Similarly, there may be features in a product that would take more time and effort than their initial estimation. There may also be an addition or deletion of certain features as per the market demand.

In a fixed-price model, you would stick to the time limit and project estimations to balance the commercial aspects of the project; whereas, in time and material model, you would have the scope of spending more time to make the final product perfect. 

Naturally, you would be able to provide a better product to your client with a time and price model. Remember, product quality plays an important role in establishing a reliable brand value and helps in increasing profits in the long-run. 

2) You will prioritize what is important for the end-product:

At the cost of sounding repetitive, we would again stress upon the flexibility that time and material model provides. During the course of development, you may find that a feature is more important than you had previously estimated.
The best course of action would be to prioritize it. However, the fixed-price model would restrict you from doing so. The fixed-price model strictly follows the specification of the initial contract; sometimes, even at the cost of the quality.

In a time and material model, you’re free to prioritize what is important. All you need to do is keep your client in confidence and then prioritize what’s productive. In this case, the decision-making is quick and more pragmatic.

3) You will communicate with the client more often:

Communication is the key to maintain long-term relationships. And, these relationships are the backbone of any successful business.
In a fixed-price model, most of the communication takes place at the time of finalizing the contract. Beyond that, your discussion gets limited to timely status updates. 

As opposed to this, the time and material method heavily depends on ongoing communication. In fact, the client takes initiative and keeps a check on the development process. As more ideas are exchanged, you end up developing a relationship based on trust and work ethics.

Trust us, a happy and engaged client will become a repeat customer and even a source of referrals. A business requires nothing more than a long-term client and good recommendations.  

4) You can get to work quickly:

A project based on a fixed-price model requires the parties to clearly specify the outline of the entire software. Not only does this process of drafting a contract take time but it is also impractical.

No matter how experienced you are, you cannot predict the exact course of software development.

With time and material models, you can start the project as soon as both the parties form an agreement. The scope of work and important features can be discussed as the project progresses. 

Thus, the development team gets the flexibility to deliver the product timely and modify it over time. As a result, the time-to-market also becomes faster.

5) Your process will become more transparent:

Many software companies prefer fixed-price models as they believe that it begins with a pre-defined scope of work. According to them, a mutual agreement is enough to bring transparency. 

As we have mentioned earlier, it is not possible to outline every possibility that may occur during development. When such a situation arises, it requires the client and the development team to hold meetings. Otherwise, you either compromise on the product quality or work more than what you’re paid for. 

In time and material models, however, the client gets a status update of every task as it is carried out. This brings in more transparency and coordination than any other model.

Moreover, if there's any modification or extra work, you can proceed without hesitation. The client would require less convincing and you wouldn’t miss out on your well-deserving fee as well.


This world is unpredictable and technology changes more often than we imagine. Thus, it makes no sense to define the scope of a software project upfront. The time and materials model makes the entire software development process more dynamic and in fact, less risky in our ever-changing times. 

With the time and material model, you get to put your best foot forward and develop a market-fit product. It also helps you give the right value to your time and resources. 

In the long run, your product quality and resource retention will help you succeed. Thus, we can confidently conclude that the  time and material model is the right choice for any software development company.

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