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Project Pricing — T&M vs Fixed Fee

Compare pricing models, calculate optimal price and payment milestones.

Project parameters

Estimated hours (baseline)

initial estimate without risk buffer

Hourly rate

$/h

External costs

licenses, subcontractors, tools

Scope creep / uncertainty risk

20%

clear scope: 10–15% · unclear: 25–40%

Target margin

25%

Project type

Fixed Fee formula

Fixed = (h × rate + costs) × (1 + risk) ÷ (1 − margin)

Time & Materials (T&M)

FLEXIBLE

Baseline quote

—

Range (min–max)

—

✓ Risk on client side · ✓ Flexible scope
✗ Harder to sell

Fixed Fee

PREDICTABLE

Client price

—

Your profit (at BEP)

—

Effective hourly rate

—

Break-even hours

—

✓ Easier to sell · ✓ Higher margin if delivered efficiently
✗ Scope creep risk

Recommendation

—

Payment schedule (Fixed Fee)

Profit vs. hours worked

T&M — revenue

Fixed Fee — profit

When to choose which model?

Choose T&M when:

Scope is unclear or likely to change
Research or discovery project (R&D)
Client wants full control
Long-term ongoing collaboration
High technical risk

Choose Fixed Fee when:

Scope is clearly defined
You have experience with similar projects
Client needs budget certainty
Tender / competitive proposal
You want to profit from efficiency

Agent PriceProAsk about project pricing

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Hi! Enter your project parameters above and ask me about choosing a pricing model, protecting against scope creep or contract negotiation.