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Paying for software using fixed price contracts vs time and material contracts

Fixed Price vs Time and Materials: which software pricing contract is right for you?

Reading Time: 5 minutes

 

The cost of development is always an important consideration when looking to hire a software development partner, and rightfully so. Such partnerships can be built on either fixed prices or contracts where the client is charged for the time and materials needed for the development. Making a decision on which one to opt for however depends but are not limited to factors such as requirements, budget, quality of work and the date in which the product needs to be delivered to the client.

Read onto to find out whether your business needs fixed or time and materials pricing for its software development.

What is a fixed price contract?

Fixed Price contracts as the name implies are software contracts whose deliverables and prices are agreed upon before starting work. Such projects involve intense questioning and probing of the client’s ideas and requirements to ensure the software house has a very clear idea of the end product. Wireframes can be extremely useful here as it will help visualise the end product. The software house then does some scoping inside itself to evaluate the technologies, designers, developers and other resources that must be deployed to deliver on the requirements expected from the client. The client is then presented with the scope of the work that is required to create the product, a plan for the development of the product, a deadline and its fixed cost.

What advantages does a fixed price contract bring you?

1. Helps with budget allocations – Having a fixed price for the deliverables can help clients allocate a set budget for it and not worry about it increasing. Any charges over the agreed amount must be notified of in advance and agreed to by both parties.

2. Requires little client involvement – Fixed price software contracts require very little involvement from the client as the deliverables are agreed by all parties well in advance. Such contracts are ideal for clients who have little technical knowledge, little time and/or prefer a hands-off approach to working with their outsourcing partners.

3. Predictability – Clients that need to plan a budget for development costs can benefit from fixed-price contracts as they are fixed and predictable. Such contracts allow the client to have a birds view of the development as it happens and makes reporting easy.

4. Fixed deadlines – Fixed price contracts provide clients with fixed deadlines that the software house will need to meet. Any inability to meet the same can have the software house incurring financial penalties.

advantages of fixed price contract meme

What disadvantages do fixed contracts have?

1. Marked up prices – Fixed price contracts tend to be costly as software houses mark up their development costs to cover any development work that might be outside the scope of work agreed in the contract.

2. Rigid scope with no possibility of changes – Fixed price contracts make no room for adding new functionalities or any change in scope. This is detrimental as the customer requirements today change rapidly, and might have the client receiving a product that is redundant.

3. Long planning sessions – Agreeing on the scope of fixed-price contracts is a tedious affair as all requirements and deliverables have to be planned well in advance. This takes an inordinate amount of time, pushing the development time further.

4. Quality assurance issues – Instances of software houses delivering products with substandard code with little testing to meet the stringent deadlines set by fixed-price contracts aren’t unheard of.

5. Miscommunication between teams – Misunderstood project requirements can have the developers doing a sizable of work that will end up being of no use. This risk of miscommunication is very real when the cultural differences between the client and software house are rather large (yet, another reason why Mood Up prefers nearshoring).

Disadvantages of fixed price contracts boardroom meeting meme

What is a time and materials pricing contract?

As you might have guessed Time And Materials contracts charge for the actual work that is done (agile pricing) against the more rigid one-time payment required of in fixed-price contracts. Such software development is accomplished by scoping the project requirements with the client, accessing the work required and then dividing the work into sprints (components). The client is then informed of the number of hours and materials that would be required to build each sprint of the project. Such an approach to pricing software development lets the client be in charge of the development and have a birds-eye view of development as it happens.

What are the advantages of a time and materials contract?

1. Better control of costs – Time and materials software contracts give clients better control over the development costs as they are usually charged on a per sprint basis. Such an approach to software development is best for clients who prefer to see what they are paying for as it is being developed.

2. More flexibility to change requirements – The ability to pay only for the work done allows clients to add and/or modify the requirements from their software product, at any time of their choosing. This is important as the market and customer requirements might change, thereby requiring new/modified functionalities.

3. Less time scoping, more time developing – Time and Materials based software products work towards building a minimum viable product (MVP) first and then making iterative improvements to it. Development work, therefore, can start immediately without the need to spend days pouring over requirements as with fixed contracts.

4. Transparency throughout the project – The client is informed of the work hours and materials that is required for development, along with the hourly rates before every sprint. Such transparency allows for better cooperation between the development house and the client.

5. Ability to terminate the partnership at any given time – Time and materials pricing contracts allow clients to pull out of contracts at a time of their choosing as the charges are by sprints. Such a pricing approach tends to be useful if the quality of work from the developers do not match client expectations.

What are the disadvantages of a time and materials contract?

1. Requires more client involvement – Time and materials software contracts require clients to play a lead role in managing the development of the product. Clients tasks in such an approach to development can have the client creating, managing the product backlog, attending weekly reviews on the state of development and product demos.

2. Costs can escalate with more functionalities – The ability to add/modify functionalities can have your product being more costly than it was budgeted for. This, however, should not pose much of an issue as the client can always terminate a contract should the cost become too excessive.

3. Uncertain deadlines due to changing requirements – Any changes in project requirements can push the deadline of the product back and delay the release of your product to the market.

So which should you choose?

Both software pricing approaches have their pros and cons which is why we recommend our clients to opt for one that best suits their development and business needs.

fixed contract vs time and material contract meme

Fixed price contracts are ideal for when the software that is required is of limited functionalities, for a set purpose that will not change anytime soon and has a very strict budget. Such an approach to development should only be taken if the product is akin to a MVP and has a strict delivery deadline.

We at Mood Up prefer the time and materials approach to software development, as it matches our agile design and development principles. Such an approach we’ve found is ideal as it is impossible for both us and the client to have a concrete idea of the end product before starting its development. The flexibility offered by this pricing approach allows our clients to add new functionalities and ensure the end product is relevant and not redundant as with a product delivered at the end of one long fixed-price development cycle.

Flutter versus React Native

Flutter vs. React Native: Which should you choose for your mobile app?

Reading Time: 3 minutes

 

Choosing the right technology stack for a mobile app can have anyone confounded with the amount of technical jargon out there. The conflicting advice you would find on Google isn’t very helpful either, and this can have you feeling disheartened despite the exciting idea you have for your app. We know this as many a client has told us the same before we sat down with them and started asking the right questions.

The tried and tested method of developing apps for both iOS and Android, is doing their coding separately (native apps). Android apps, for example, require a developer to use Kotlin or Java, while iOS apps are built using Swift or Objective C. Such separate coding is essential for the performance and the stability of the apps, despite the increased time and cost involved.

A second very interesting option is the use of cross-platform solutions, such as Flutter and React Native through which a developer can translate the code to fit both iOS and Android platforms. To elaborate, Flutter is written using Dart, and compiles its code into a native library which is then attached to each platform project. React Native, on the other hand, is a framework in which the code is written in JavaScript, allowing it to run in the background thread of an application and be translated into native code and components expected by iOS and Android. Both platforms as per our experience perform the same despite their differences and have been gaining increasing acceptance from the development community due to their ability to shorten development time and effort.

The technology stack you would need however is dependent on your idea and the expectation you have of your app, which is why we have penned this article with a comparison of Facebook developed React Native and Google-owned Flutter.

Maturity, community & stability

Flutter alpha was first seen in mid-2017, giving React Native a two-year headstart in building a solid foundation, larger community and access to big players in a market with no competition. Flutter, therefore, might still have issues that have been resolved by the React Native community who provide more support and is generally considered more stable. Google, however, is putting its weight behind Flutter and is fast becoming a force to be reckoned with.

Design

Flutter implements components from its own graphics library, allowing developers to choose between Android’s Material Design and Cupertino’s iOS-style widgets to make an app look the way it should without additional work.

React Native, on the other hand, uses platform-specific components, which makes the components such as buttons or switches look different on iOS and Android. Creating identical apps, therefore, will give rise to additional work.

Time

Flutter as we mentioned previously can be useful for developing apps when time and costs are of the essence. This, however, is not applicable when the app contains a sizable number of custom views and requirements that are difficult to implement.

React Native with its large community of developers, on the other hand, can be useful here its head start on Flutter has created a library of information one can use to troubleshoot any issues.

Maintenance & Updates

An app is not a one-time investment and needs to be maintained well. Both Flutter and React Native are equally good in this regard if one is comparing the time and effort that needs to be invested. Those who work with React Native however, might find their work made easier due to a large amount of information they can turn to online.

Updates are vital for any app as they allow it to add/remove functionalities in response to market changes and keep it secure. Flutter wins this one as updates cause very little problems, whereas apps built using React Native can pose unexpected issues.

Documentation

Flutter’s documentation is very exhaustive and supported by Google codelabs example apps, through which developers can learn how to develop and search for specific solutions.

React Native’s documentation in our opinion is not as good.

Popularity with developers

React Native due to their headstart is more popular than Flutter at the present. Flutter, however, is fast narrowing the gap as we are seeing an increasing number of clients and developers taking it up. You might also want to see the popularity of the two terms on Google Trends over here.

Support for testing

Testing is an integral part of app development and Flutter offers a wide range of support for such tests and provides rich documentation about it.

React Native does a good job of handling unit tests. The same, however, cannot be said for its capability for handling integration or UI tests.

Conclusion

Cross-platform app development is the future, with Flutter and React Native vying for a piece of it. Both platforms in our opinion have their pros and cons, depending on the requirements you expect of the app. What is clear however is that React Native is capable, has more help for troubleshooting issues, whilst Flutter is easier to update and provides richer documentation. We at Mood Up are very curious and excited to see what the future has in hold for cross-platform development frameworks.

Do you have an idea for an app we can help with? Mood Up has extensive experience in mobile app development and offers a one-week development trial.