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

07 Jun 2021 - 6 min read 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 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 the two models differentiate on numerous paragraphs. 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? Find out why that is important and choose the right model for your project.

Fixed Price Model in Software Development – Essence and process of work

This model is arguably still the most widely used, because of its historical track record of being successful and its reputation of being around since forever. An industry standard, the model in itself is a completion of a service within a set frame of time in exchange for a fixed payment. The scope and specification of the project are clearly defined right off the bat. That is why the model is not known for being very flexible, especially if your project requirements are not very clear in the beginning. Incorporating revisions of the ongoing project is made by creating an additional agreement and re-assessment of the final price. 

The Fixed Price model, however, ensures the delivery of the software product within the pre-defined timeframe and pre-agreed budget. If you are capable of fully describing the functionalities and specifications of the product in the beginning stages of the project, then the Fixed Price model might be best for you. 

Another reason for this model to stay relevant to this day is the strictness of the contract that has been written down at the beginning, and the little to none deviation from it for the entirety of the project. If, as a client, you don’t value the involvement in the workflow during the process of work, then the Fixed Price model is your go-to. Nevertheless, if you think that the features of the projects are plentiful and are likely to evolve with time, then this model might not be your best bet. 

The process of work usually goes through a pre-creation phase that involves an initial meeting, analysis of the environment along with a project specification. Then comes the formation of wireframes and design guideline which is followed by the proposition of a deadline and budget. During the project execution phase, the client has no involvement until the project is delivered, after which a revision can be made. Here the parties decide if the project is ready for launch or 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 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 cost


Dedicated Teams Model in Custom Software Development– Why is it getting so popular?

This model is based on the idea of having a remote team devoted to the realization of your project. The importance of having a team of dedicated developers can’t be overstated. The customer’s role in the project is more hands-on than in the Fixed Price model. This allows for better management when complex situations happen, which is important in software product development. The continuous evolution of the project is observed by the client and control over the team is to be expected. 

The outsourced web development company’s task is to supply you with a team of exceptional developers, project managers, QAs, etc. that best fits the needs of your project. Specification of the number and skill set of the team is usually discussed at a meeting, so an agreement on that is made before the project starts. And the team size and skills can be changed at any time. Beneficial is also the full-time dedication of the team and their complete concentration in your project.

When developing a more complex product, the Dedicated Team model is usually the more preferred option. The personal management of the development process is a highly valued aspect among companies that seek to release a new software product – that is why this model of work has been gaining popularity in the current market. The “flexible cooperation” and “higher cost efficiency”, are the two biggest reasons why industry professionals name this model of work as their preferred one.

At BGO Software our greatest priority is ensuring a team that has the right assets and technical skills that your custom software or new web application project requires. Project managers and QA specialists are a vital part of our teams together with skillful developers and technology experts. However, the Dedicated Team model remains very customizable as the client has a big involvement throughout the entire development process.

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 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 actually 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.
  • A higher level of engagement of the customer
  • You need to manage the team by yourself and keep it busy


Fixed price or dedicated team – which one to choose?

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 clearer idea of what is to be achieved, are more suitable for the Fixed Price model. For long-term cooperation with 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.

At BGO Software we always act as trusted technology advisor of our customers. So we will help you to find a way of collaboration with us, which is most suitable for your project and budget.