Hourly Versus Fixed-Price App Development. Which is the Best Option?

divider

Jan 14, 2019

Fixed-Price Versus Hourly App Development at Designial

As businesses continue to display a greater need for app development services, we are also witnessing growing concerns among B2B professionals regarding app development – and a core pain point being the pricing strategies adopted by most agencies.

Many businesses opt for flexible pricing plans when selecting an appropriate app developer. This leaves a lot of room for app development agencies to overcharge.

Open-ended pricing can be even worse as it allows app development agencies to take the projects beyond the client’s budget. They propose an hourly rate and extend the project to as many hours as possible, increasing development costs for clients.

Disadvantages of hourly pricing for app development

One of the core concerns with hourly pricing in an app development project is that business owners are unaware of the final price. Most mobile app developers only offer an estimate, which they can stretch to fit their own convenience.

Since business owners seldom have an in-depth knowledge of the technicalities involved, they don’t decide the scope of the application. It often remains undefined, allowing app developers to alter and modify it on-the-go – yet another way of increasing mobile app development costs.

The result is an open-ended outline for app developers. They can add multiple additional features to the application that are neither required by the client nor are aligned with its business goals. As a consequence, businesses end up paying more than they should for their app development projects.

Plus, without a fixed budget at hand, business owners give app developers too much leverage. This can be expensive for the company since app development costs can quickly grow beyond any reasonable estimates they’d made earlier. Simply put, efficiency is no longer beneficial for the developer.

In other words, developers have an incentive for being wasteful and unproductive – they can add more hours to the project, consequently increasing development costs for the client.

Now that you understand the cons of the hourly pricing model for app development, let’s look into how its alternative, a fixed-price app development model, benefits your business.

Advantages of fixed-price app development

A core benefit of fixed-rate app development is that you, as the client, are aware of the final price. You provide a fixed budget for the development agency to work with, and they are left with no room for scope creep during the project.

Fixed-rate app development is also great for ensuring efficiency during the entire app development process.

From the development agency’s point of view, being proficient at work and completing the project within the timeline allows them to move on to the next project sooner.

In other words, they can put more projects to bed in a given time than they would in an hourly pricing app development model. That’s because a fixed budget also means fixed deadlines, so there won’t be any undue delays or surprises.

On the contrary, a client can receive the final product within a given timeframe, and launch it earlier than the set date. In fact, a study by IBM concluded that faster time-to-market results in a significant increase in profits.

Another benefit of fixed-price app development is that it becomes easier to build consensus about the scope of the project.

Most businesses, especially larger organizations, don’t take consensus-building into account. We cannot emphasize the importance of consensus-building enough, especially if cost-cutting is a motive.

When the scope is left undefined, the developers continue to incorporate features, regardless of their utility for the business. In short, an open-ended scope can elevate your app development costs with features that neither the users nor the company could benefit from.

On the other hand, in fixed-price app development, companies are sure about the scope of their application. They know precisely what they want – a fixed timeframe as well as a fixed cost.

This leaves no room for the development agency to tamper with the requirements of the project. plus, if a new idea comes up during the development process, it can be set aside to be added once the beta-phase is complete.

In conclusion, having fixed-price app development keeps developers from straying away from a pre-decided outcome-driven path. It also allows organizations to stay within budget while maximizing the efficiency of the project.

In a nutshell

When you sign up with an app development agency, trusting them with an hourly pricing model may cause you to lose track of the entire process. There’ll even be times when you won’t know what they are doing, and how long it will take them to get done. An hourly pricing model is a risky path for any business that values its time and money.

That’s why opting for a fixed-price model is always the best approach. In fact, professional app development agencies like Designial always quote a fixed price instead of providing a vague estimate for their projects.

They keep you well-informed about the progress of your app and allow you to stay in control of the entire project.

If you’re looking forward to building an application that aligns with the scope of your business, book a free consultation today.