However, as clients also love scope creeping, it’s been very important to clearly state exactly what the end deliverables will be, and that anything outside the scope of that work will be charged extra, either at an hourly rate or as an additional contract.

The warranty is also clearly stated as anything directly related to the work completed. You get very used to saying “We’d love to do that, but be aware it’s out of scope…”

Fixed pricing works very well with Agile development methodologies as these break a project up into 2 week “sprints” which can easily be estimated, budgeted for and expanded by just adding another 2 week sprint to the end of the dev cycle to add new features.

It’s also easier to mix and match the different billing techniques of your subcontractors when billing at a fixed price.

Japan Website

You’re definitely right about the scope creep problem, which I consider to be the biggest difficulty with fixed pricing. You make a good point that hourly rates can also work to the advantage of the client if you bill them frequently, so they don’t get hit with a massive bill they are not expecting. Perhaps this point can be used as a selling point to convince clients to accept hourly billing.

Rafyta,

That’s a pretty good solution, as long as your clients know up front what they are getting into. I doubt that the scope creep problem can ever be eliminated completely- and perhaps it shouldn’t be, but I think the goal of a good pricing and project management scheme is to keep it within a reasonable level so that neither party suffers.