How to Price Custom Web Development Projects: Fixed vs. Hourly Billed

Which Option Is Better for Your Business?

Has your developer ever said, “we can’t do that because this feature wasn’t included in your statement of work” or “you need to sign a change order to finish your website?”

These issues might arise as your project progresses and specific details or requirements come up that you didn’t consider in the planning phase. You might also have a new or better idea for how a feature should work once you start testing it out on the demo website. Sometimes you can’t think of every detail until you actually start using the site and discover something isn’t as intuitive to the user as you hoped it would be.

For better or worse, the truth is that there is no definitive answer when it comes to which type of custom web development project is best for your business. However, it is important to consider the benefits of each option in order to make the best decision that not only fits your budget and timeline, but also your unique needs and circumstances.

When a fixed price project is sold, a detailed scope of work is prepared and a fixed fee is determined for the project’s specific requirements. In contrast, an hourly rate project may have a scope of work and good faith estimate prepared at the time of the agreement, but the provider bills the client on an hourly basis for the actual hours worked and the scope can be flexible. There are pros and cons to each type of project.

There are a lot of factors to consider when choosing between an hourly or fixed rate custom web development project. These may include the initial discovery needed to properly scope the project, the budget, and the amount of time required to complete it. 

Pros of Hourly Billed Custom Web Development Projects

There are a few pros of hourly billing when it comes to custom web development projects for businesses of all shapes and sizes. 

Goal Oriented Scope

Before the project begins, the focus can be more on the goals of the website and how they can benefit your business vs the specific tasks needed to build the website. The goal might be to generate more leads or sales, create brand awareness, or find qualified talent. An hourly project will typically include a discovery phase to uncover all of the specific requirements and functionality needed to reach the site’s goals. If you’re not certain exactly what you want or need for your website, an hourly project will be a good option for you.

Greater Flexibility

An hourly website project can start with just the goals of the site and a general scope of work, knowing that you can define the specific requirements in the discovery phase and tweak them during the testing phase. For example, you might know that you want to increase sales and you want a WooCommerce website that accepts payments and computes shipping fees. However, during the discovery phase, you may discover that your competitors offer a live chat feature and a tiered discount program that you will need to implement to stay competitive. During user testing on the demo site, you might find that a different organization of the product filtering would be easier for your customers to navigate and find what they want to purchase. With an hourly project, your scope can be flexible so you can add features and pivot as needed.

Cons of Hourly Billed Custom Web Development Projects

New ideas and reworking a design or development feature after testing will require more time and budget. If you have a strict budget and timeframe, an hourly billed website project may not be a good fit for you. 

Pros of Fixed Price Custom Web Development Projects

A fixed price project has the obvious benefit of a defined budget and a predictable payment schedule. You may also need to be less involved in the project since the requirements are well defined in the agreement and can’t be changed during the development of the website. The launch date should be pretty firm as well since the scope won’t be changed along the way.

Cons of Fixed Price Custom Web Development Projects

A fixed price contract is generally not recommended for clients looking for a custom website since it requires the client to do a lot of upfront planning and it doesn’t allow for adjustments to the scope of work.

Detailed Requirements Needed Before Signing Contract

Since a detailed scope of work will be needed to determine a fixed price for a custom website, you will need to do your homework before signing a contract. Many business owners know that they need more sales or leads from their website, but it can be difficult to anticipate all of the features and functionality that will be needed to reach your goals. You may want to let an expert do the discovery and define the requirements for you so you can use your valuable time to run your business.

Inflexible Scope of Work

Even if you do your homework and start with a well-defined scope of work, new ideas usually come up during the course of a custom web development project. With a fixed-price project, new ideas will need to wait until after the original project has been completed. The same is true if you planned a feature to function a certain way but then during user testing you discover that it’s difficult to use. The fixed price is determined by the agreed upon scope of work, therefore additions and adjustments are not allowed until after the contract has been fulfilled.

Reach Out To Our Team Today To Learn More About Pricing Your Custom Web Development Project

In summary, hourly projects give you the most flexibility and allow the experts to guide you in determining what is going to give you the best results from your business’s website. If you have a tight budget and no room for flexibility, a fixed rate project might be better for you.

Tags: Our Favorites