"How do you charge?"
It's one of the first questions every prospect asks, and it's the wrong question. The right question is: which pricing model aligns your incentives with ours?
Because here's what most people don't realize — the pricing model shapes the project more than the price itself. It determines how scope changes are handled, how risk is distributed, who absorbs surprises, and whether the agency is incentivized to deliver fast or deliver right.
We've worked under both models. We've seen both succeed and both fail. Here's what actually matters when choosing between them.
Fixed price: what it really means
In a fixed-price contract, the agency quotes a total cost for a defined scope. You pay that amount regardless of how long the work takes. If the agency underestimated, they absorb the loss. If they overestimated, they keep the margin.
When it works well: Small, well-defined projects with clear requirements that are unlikely to change. A marketing website with 8 pages. A data migration. A mobile app with a locked feature list and approved designs. If the scope is genuinely fixed, the price can be too.
The hidden problem: Fixed price creates a perverse incentive. The agency's profit depends on finishing as fast as possible with as little effort as possible. Every hour over the estimate eats into their margin. That means when something unexpected comes up — and it always does — the agency is incentivized to cut corners rather than solve the problem properly.
Change requests become adversarial. "That wasn't in the scope" becomes the most-used sentence on the project. The client feels nickel-and-dimed for every small adjustment. The agency feels squeezed by a client who keeps adding things. Both sides are right, and both sides are frustrated.
The other problem: to protect themselves, agencies pad fixed-price quotes. That 20-30% buffer you're paying isn't for your benefit — it's insurance for the agency. You're paying for risk that may never materialize.
Time & materials: what it really means
In a time-and-materials (T&M) contract, you pay for the actual hours worked at an agreed hourly or daily rate. The total cost depends on how long the project takes.
When it works well: Projects where requirements will evolve, where the client wants to stay involved in shaping the product as it's built, or where the full scope isn't known upfront. This covers most custom software projects, honestly. Real-world software is rarely a straight line from spec to delivery.
The hidden problem: Without guardrails, T&M can feel like a blank check. If there's no cap, no milestone structure, and no regular accountability, the client has no visibility into whether they're getting value for the hours billed. The agency has no incentive to be efficient — every extra hour is revenue.
Bad T&M looks like this: monthly invoices with line items you can't verify, no clear deliverables tied to the billing, and a vague "we're still working on it" when you ask about progress.
The real answer: it depends on what you're building
Neither model is inherently better. The right choice depends on three things:
How well-defined is the scope? If you have approved designs, a locked feature list, and no expected changes, fixed price can work. If you're still figuring things out — which is most projects — T&M gives you the flexibility to adapt without penalty.
How involved do you want to be? Fixed price is a "tell me when it's done" model. T&M is a "let's build this together" model. If you want to adjust priorities, add features based on user feedback, or pivot direction mid-project, you need T&M. Fixed price punishes you for changing your mind.
How much do you trust the agency? T&M requires trust. You're trusting the agency to bill honestly, work efficiently, and flag problems early. If you don't trust your agency enough for T&M, fixing the price won't solve the trust problem — it'll just move the conflict to scope disputes instead of billing disputes.
What we use at DCT
We work primarily on time and materials — but with structure that addresses every concern clients have about the model.
Scoped phases, not open-ended billing. We break every project into phases with defined deliverables and estimated budgets. The client approves each phase before it starts. If Phase 2 is estimated at 80 hours, the client knows that upfront and gets weekly updates on where we stand.
Biweekly demos. Every two weeks, the client sees working software. If the hours aren't producing visible progress, that's immediately obvious — not buried in a monthly invoice.
Transparent time tracking. The client can see exactly what was worked on, by whom, and for how long. No vague line items. No "miscellaneous development."
Budget alerts. If we're approaching the phase estimate, we flag it before we hit the ceiling — not after. The client decides whether to extend the budget or adjust the scope.
We've found this model works for our clients because it gives them T&M's flexibility with fixed price's predictability. They know what they're paying for, they see the progress, and they can change direction without a formal change request process.
When we recommend fixed price
We don't refuse fixed-price projects. We recommend them when the conditions are right:
The project is small (under 4 weeks of work). The scope is completely defined with approved designs. The client has no plans to change requirements. Both sides agree the spec is final.
In these cases, fixed price genuinely protects both parties. The client knows the cost, and the agency knows the scope. No ambiguity.
But if someone comes to us with a 6-month project and says "give me a fixed price," we push back — not because we want a blank check, but because a fixed price on a 6-month project protects nobody. The scope will change. Requirements will evolve. And the fixed price will either mean the agency cuts corners, or the client pays for 30 change orders.
The questions to ask your agency
Whatever model you choose, ask these questions:
If the scope changes, how is that handled? Fixed price: what's the change order process? T&M: how do we prioritize new work against the existing budget?
How do I know I'm getting value for the hours billed? Ask for time tracking transparency, demo cadence, and milestone structure.
What happens if we go over budget? Both models need an answer to this. "We'll cross that bridge when we come to it" is not acceptable.
Can I see a breakdown of the estimate? Agencies that can't explain their numbers are guessing.
The pricing model matters less than the process behind it. A disciplined agency on T&M will deliver better results than a sloppy agency on fixed price — every time.
We've written about our delivery process and how to write a brief that sets the project up for success. The pricing model is one piece of a larger picture.
Choosing an agency and want to understand how we'd price your project? Let's talk →