Fixed price vs. hourly: which one protects you?

Every development contract picks one of two ways to lose money. Hourly billing means the slower the work goes, the more you pay. Fixed price means the vaguer the scope, the more the developer pads the number to cover surprises.

Both models are trying to solve the same problem: nobody knows exactly what the app is until it exists.

What hourly actually incentivizes

An hourly developer has no reason to finish quickly. A good one finishes quickly anyway, because they have other clients waiting. A mediocre one discovers that a two-week feature can take five, and the invoice is still valid.

You end up managing the developer's time instead of the product. Weekly hour reports, timesheet reviews, "why did the login screen take 22 hours" conversations.

What fixed price actually incentivizes

A fixed-price developer wants the scope locked before work starts, because every change after that is either unpaid or a change order. So you get a long discovery phase, a detailed spec, and a signature. Then the first build reveals that the spec was wrong in six places, and now every fix is a negotiation.

The padding is real too. A fixed quote includes a buffer for the unknown, usually 20 to 40 percent, and you pay it whether or not the unknown shows up.

How we do it

Fixed price, short cycles, working software as the spec.

We quote the whole project up front, as one number. It doesn't move unless you add something that wasn't in the brief, and when that happens we tell you the cost before we build it.

What makes this work without padding is speed. When a working build lands on your phone on day 3 and every day after, scope questions get answered by tapping through the app, not by rereading a document. There's no gap between what was specified and what was built, because the build is the specification.

What you should ask any developer

Whichever model they use, ask these:

  1. When do I first see working software? (Days, not weeks.)
  2. What happens when I change my mind? (A conversation and a number, not a change-order form.)
  3. What do I own if we stop halfway? (Everything built so far, in a repo under your account.)

The answers tell you more than the billing model does.