Fixed Price or Dedicated Team – Which model of work is best for your project?

Updated - 07 Jan 2024 9 min read
BGO Software
Dedicated Teams vs. Fixed Price in Software Development

Have you decided to outsource the development of your new software product? Choosing the right model of work for the creation of your custom web application is the first and most crucial step. We view the “fixed price” and “dedicated team” as the two industry standards in software development engagement models, and both have been involved in a continuous fight for the crown of “most preferred model among our customers”. 

Any case for developing a bespoke software solution is strictly individual, and these two models differentiate on numerous paragraphs including project requirements, development process, team size, and the nature of client engagement models. It’s time to take an in-depth look into why you should choose one over the other. What are the pros and cons of each one? Are the requirements of your project likely to change with time? This decision can significantly impact the project budget, project management approach, and the final product. Find out why that is important and choose the right model for your project, whether it’s a fixed-price contract or a dedicated team time and material model, especially for complex projects or long-term engagements.

Fixed price model in software development – essence and process of work

This model is an industry-standard when it comes to software development company practices. It is arguably still the most widely used due to its historical track record of being successful and its longstanding reputation. The fixed price model is the completion of a service within a set frame of time in exchange for a fixed payment, making it a suitable pricing model for short-term projects with a clear scope. The scope and specification of the project are clearly defined right off the bat. This is why this model is not known for being very flexible, especially if your project requirements are not very clear in the beginning.

Incorporating revisions in this engagement model is handled by creating an additional agreement and reassessing the final price. However, the fixed price model ensures the delivery of the software product within a pre-defined timeframe and pre-agreed budget. If you can fully describe the functionalities and specifications of the product in the initial stages, this model, which is similar to a fixed-price contract, might be the best fit for you.


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Another reason for the enduring relevance of this model is the strictness of the contract established at the outset. This model is ideal if, as a client, you prefer not to be heavily involved in the workflow during the development process. Nevertheless, if you anticipate that the features of your project may evolve, particularly in complex projects or those requiring continuous communication, then this model might not be the best choice.

The work process typically begins with a pre-creation phase, involving an initial meeting and an analysis of the environment, along with a detailed project specification. This is followed by the formation of wireframes and design guidelines, culminating in the proposition of a deadline and budget. During the project execution phase, the client has minimal engagement, only becoming involved again when the project is ready for delivery. At this stage, any necessary revisions are discussed, and if changes are required, a new quotation is proposed, reflecting the time and material needed for completion. Here the parties decide if the project is ready for launch or if there are changes to be made. In the event of the latter, a new quotation is proposed.

Advantages of the fixed price model for your bespoke web application or projects

  • Fixed budget – you can plan better your financial resources and will know the end price before you start the project
  • Strict deadlines – you will have a clear roadmap and fixed deadlines for every aspect of the project
  • Lower risk
  • Knowing what to expect from the very beginning

Disadvantages of the fixed price model

  • Lower flexibility – once you complete your web project specification and agree on it with the software development company, you cannot change it.
  • Limited control over the ongoing process – because everything is agreed upon in the beginning and you have strict sprints, you have lower control and agility during the process of development.
  • Preliminary requirements have to be spot-on
  • Higher total cost

Dedicated teams model in custom software development– Why is it getting so popular?

The dedicated teams model is quickly gaining traction as a favorable outsourcing model. The model itself revolves around the concept of a remote team fully devoted to your project’s realization. The prominence of dedicated developers in this model offers unmatched benefits, especially for complex projects where the scope might be uncertain or subject to change. The customer’s role is hands-on, surpassing what is typically experienced in a fixed-price contract, allowing for full control and adaptability during the development process. 

An outsourcing vendor, such as a web development company, is responsible for providing a team that seamlessly aligns with your project’s requirements. This includes not only developers but also project managers, QA specialists, and other technical support staff. Discussions regarding the team’s composition – addressing aspects like team size and the specific skill set of each team member – are essential and usually take place before project initiation. 

In the realm of custom software development, where projects are often complex and require ongoing adjustments, the dedicated team model shines as the preferable choice. It offers a blend of a flexible cooperation model and higher cost efficiency, making it a popular choice among industry professionals. At BGO Software, we prioritize aligning the team’s technical skills and expertise with the unique needs of your custom software or new web application project. Our dedicated team model emphasizes client engagement throughout the development process, ensuring that each stage of the project – from initial task allocation to final product delivery – receives the attention and expertise it deserves. 

This approach not only facilitates a higher quality product but also ensures that the project management is in line with the customer’s vision and the project’s goals. The emphasis on continuous communication and collaboration between the client and the dedicated team fosters a productive and successful partnership. Moreover, our focus on ensuring that the different engagement models we offer, be it time and materials or a more traditional fixed service cost approach, are tailored to the specific needs and budget of each project, exemplifying our commitment to delivering solutions that are both efficient and effective.

Advantages of the dedicated teams model in custom software development

  • Adaptability – as you have a whole team fully available for you and built according to your own requirements, you have better adaptability and high flexibility.
  • Cost-efficiency  – usually getting a team to work on your projects delivers better cost-efficiency and improved TCO for your project.
  • Direct control – you have full visibility and high control over the team
  • Collaboration – better collaboration with the software development company and the opportunity to add more people to the team at any time.

Disadvantages of the dedicated teams model in custom software development

  • Execution of the project can take a longer time – this happens only if the team is not managed effectively. The issue can be easily resolved when you add a skillful project manager to the team. Or if you decide to expand your team by additionally hiring team members and assigning them management roles. 
  • A higher level of engagement of the customer
  • You need to manage the team by yourself and keep it busy

How to choose a dedicated team?

So, you have decided to opt for a dedicated team as your preferred client engagement model for your project. Choosing the right one is crucial to maximize the benefits for your business and goals. Here are the steps to follow:

Research & compare your choices

Once you’ve identified potential dedicated teams from various software development companies, thorough research is vital. Examine their past projects, client testimonials, and areas of expertise to gauge their suitability for your business model. Understanding their work process is essential to ensure they align with your project’s goals and requirements, whether it’s for small projects, medium-sized projects, or large-scale initiatives.

Validate the skills & experience of the dedicated teams

The capabilities of team members are fundamental to a competent dedicated team. Setting up interviews, reviewing work samples, or checking client testimonials can give insights into their technical support and problem-solving skills. You should consider a small test project to assess the dedicated developers’ technical prowess.

Opt for a flexible approach

Flexibility is key, especially in managing complex projects with uncertain scopes. Assess whether the dedicated team can adapt to changing requirements and offer innovative solutions. This flexibility is crucial for your project manager in steering the project towards success.

Be open and honest about your budget capabilities

An open discussion about your project budget sets realistic expectations. This transparency ensures the dedicated team understands your financial limitations, helping them tailor their services to your needs, whether you have a low budget or are looking to save money while still aiming for a high-quality product.

Pay attention to the contract

Drafting a detailed contract is crucial. It should cover everything from task allocation to project stages, and from team size adjustments to monthly payments based on work done. Legal advice is advisable to ensure a clear understanding and to avoid future disputes.

Look for smooth communication

Smooth and continuous communication ensures effective project management. Evaluate how the dedicated team interacts during initial meetings. A team that is responsive, clear, and open to feedback will be crucial in achieving a successful engagement. This is especially important when it comes to long-term projects where ongoing collaboration is key.

Fixed price vs dedicated team – which model of work is best for your project?

There is no universal answer to this question. It depends on the type of project that is to be executed. Shorter-term projects with set functionalities and a clearer idea of what is to be achieved are more suitable for the fixed-price model. For long-term cooperation with a higher degree of complexity and need for adaptability, go for the dedicated team model.

It is important to make up your mind on what are the priorities and what is of greater value for the success of your project. So is it relying on a fixed price or having the agility and freedom of a dedicated team? If you are still unable to make the decision, that is going to have a huge impact on your future software product, reach out to us. Our specialists can give you advice on which one is best for your project so you can make a more informed choice.

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