Many times clients send us e-mails like this: “Hello, I want to build an e-shop similar to X. How much does it cost?”

That’s it. No BRIEF, no requirements, nothing. I assume that such a message was sent to at least 5-7 other agencies and the price is the main factor here.

Then I try to collect some piece of information, but it is still not enough to make a proper estimation. I suggest working in Time & Material.  You pay on an hourly basis. Customer is surprised:

  • “But I don’t know, how much it will cost”
  • “You will charge me more that in fixed price”
  • “What if my budget will be over and I finish with half-done website?”

Let’s have a look on 2 scenarios to see the difference

Scenario 1

John is asking for fixed price and he define his needs clearly.

Pros of fixed price in eCommerce

  • he pays, what he promised
  • he received the product he defined at the beginning
  • he can monitor progress and milestones

Cons of fixed price in eCommerce

  • his costs are higher than in T&M, because agency needs to estimate higher budget for potential risk of delays, changes
  • he can not change his project, because it is out of specification
  • he is not flexible and he doesn’t attend the process of creation

Scenario 2

John is deciding for Time & Material and this is how it goes:

Pros of time & material in eCommerce

  • he pays only for working hours used in the project
  • every week he can see progress and piece of software and he approves it – it minimize risk of delivering unwanted product
  • he can change his mind on the way
  • he can start the project quickly with weekly stand ups
  • project evaluate within the time so at the end he receives something he really wants
  • he can lead developers and control every piece of software

Cons of time & material in eCommerce

  • basic budget can be exceeded (but in most cases it is not)

Conslusion

As you can see in the IT project, what matters is flexibility. If you are the client who is not sure, how the final product should look like, use Time and Material. You will decrease the risk of building something you don’t want to build. You are flexible and with experienced developers, you might create something way better than you were planning at the beginning.

Talk honestly to the agency and every week make sure, you go to the right place.

If you want to try our Time & Material Service just contact us.

You can also learn more about Time & Material (in SCRUM Methodology) here: http://scrumtrainingseries.com/

Damian Winkowski

Work less, but smart. Achieve results and ROI. eCommerce Geek (Magento Experts), right now at Divante eCommerce Software House

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