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Binh DuongBinh Duong
May 25, 2022

Hour estimate based on a fixed fee or a recalculation?

In addition to the insight into your wishes, this elephant has also been in the room for a while: How to deal with your budget? Should you have to have the software developed based on a 'fixed fee', in other words for one fixed price? Or is it smarter to go for subsequent calculation? For your budget it is probably nice to work with a fixed fee. The quality of the software however begs for subsequent calculation. What should you choose now?

With the table below we help you gain insight into the processes behind a fixed fee and an hour estimation. I will also take you through the favourite working method of Dutch Coding Company.

Table fixed fee vs recalculation

Why recalculation is our favorite

Functions that have been determined in advance change regularly in practice. You often find out during development that (minor) changes are required. Functions that you wanted so badly in phase 1 turned out to be less important in phase 2. If we had budgeted everything, this would have reflected in the costs of project management. Now we can take a look at what is really important per phase. Moreover, recalculation ensures a much higher quality of your product.

Developer at work

Keep grip on costs when estimating hours

We mentioned it before: milestones are the holy grail for controlling costs. If you build everything in one go, it takes a long time before you have experience with a working product. The chance that you will build functions that are unnecessary is huge. With milestones you get experience from the market as quickly as possible. So you always choose the most valuable functionalities to develop.

Bugs

With a fixed fee is meant that time will run out at some point. Perfect software only exists in romantic software comedies. You don't want to encounter bugs months after delivery. With a fixed fee you always get that limit at least once. It takes a lot of energy. Because 'what should the builder have overlooked' and what is 'a bug that falls outside the project as budgeted'.

Milestones

When fixed fee

Basically never. Except for our full design sprint. We determine within a week what the specifications of your software should look like. This process is an internationally proven method of 5 working days. That is why we can easily ask for a fixed fee here. We are sure that we can continuously deliver quality.

We see the software itself as a living product. It is never finished, also because the world around the software is constantly changing. We therefore prefer to work with people who want a strategic partnership. A key ingredient for software with striking impact.

Fixed fee flexible scope

Hybrid, a kind of fixed fee

Recalculation is not a realistic option for every party: sometimes there are hard limits to the budget. In that case we can also work fixed fee but with a flexible scope. We do stick to a fixed budget, but we keep the deliverables flexible. We divide the functionalities into must haves and nice to haves: the must haves are guaranteed to be delivered within budget, but we only develop the nice to haves if we have time (and therefore budget) to spare. This way you always have the maximum value for your budget!

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