07 Sep Dedicated Team vs Fixed Price – Which Software Development model to Choose?
Establishing a mode of cooperation often goes unprioritized in the pursuit of a successful software development initiative. No doubt, proper documentation of the project’s requirements is vital for receiving accurate quotations and laying a solid foundation for the work to be put in.
Not choosing the right partnership option, however, can lead to a risky software development journey, terms of in terms of time & money. According to a report, around half of all outsourcing projects are unsuccessful due to miscommunications, nearly 40% found “hidden costs’ to be a big problem, and 37% think when it comes to outsourcing failures, insufficient planning is the main culprit.
These and many other issues can be resolved with a properly devised contract that encompasses all the important aspects of the client-software development company collaboration such as:
- Project overview.
- Scope of work.
- Development requirements.
- Development roadmap.
- The pricing model
Now, aspects like the scope of work & methodologies are relatively easier to pen down but where it gets challenging is choosing the right engagement model. To help you understand your choices better, we will discuss the two most popular outsourced development models – dedicated team vs fixed price. So let’s get into it.
Dedicated Team vs Fixed Price – What to Choose?
Dedicated Team Model
In a dedicated or extended team model, the software company offers you a dedicated team of developers. This team possesses the skill set required for your development needs and will work on your project exclusively till completion.
In this engagement model, you would mostly be in constant communication with the Program/Project Manager, who will be the central point of contact between you and the developers. In most cases, the outsourced developers become an extension of your in-house team to work toward the same development goal.
When hiring developers, you sit down with the software development company and list down some basic project requirements such as:
The number of developers required.
- The number of hours per week they’ll be working.
- Required skillset.
- The technology stack required for the project.
Once the needs are understood, the software service provider will prepare a relevant team and work towards a development roadmap. However, the latter is not always constant, changing needs will require changes in the process too. So there’s has to be ongoing coordination between you and the software development company.
This model is ideal for projects that require constant changes and there aren’t any specified set of features and functionalities.
The pricing (usually monthly payments) depends on the number of developers hired plus the fixed charges set by the outsourced company. Some of the biggest benefits of dedicated team model include:
- Better accountability.
- Ongoing development & delivery.
- Cost savings.
- Swift and flexible workflow.
Fixed Price Model
If you are a business looking to hire developers for a project that has clearly defined goals such as a web and mobile app with a fixed number of features or a project with a particular budget, a fixed price model may be your best bet.
This engagement model will work best under the following assumptions:
- All the project requirements are presented to the outsourced software company in the very beginning.
- Upon clarification and agreement on the project details between both parties, the vendor puts forth the project cost, payment schedule, and a deadline for project delivery.
- Any changes to the project later will be subject to price re-negotiations.
In a fixed-cost model, the client has little involvement in the development process. The burden is on the software company to deliver high-quality products in time. Advantages of fixed price model include:
- Fixed budget (low financial risk).
- Fixed project delivery deadline.
- Easy to manage development schedule.
- It eliminates the need for constant input from the client.
A healthy client-company relationship is vital for successful & productive software development. Not only does it eliminate extra costs due to miscommunication but also paves for a high-quality product. With the right engagement model, both sides are less prone to risks, and the probability of success increases too.
In the last 15 or so years in the IT industry, Intagleo Systems has successfully developed hundreds of products for clients in the US. UK, and Europe, using both dedicated and fixed cost models.
If you are in two minds about what model to choose between dedicated team vs fixed cost, Intagleo can assist you. Get in touch with us today for all your development needs