Companies are often in a dilemma about which product model to choose for product development. So, today we will try and resolve that confusion for them. Today let us analyze the fixed price model on the basis of its advantages and disadvantages.
Pros of the fixed price model
Low financial risk
You will know the exact amount you’ll pay once the project cost is specified in the contract. You cannot unnecessarily be overcharged by the software provider. This contract model virtually eliminates the possibility of going over budget.
The development team can better predict the project’s timeline with a final scope and list of features. They can develop a clear plan and set firm deadlines based on it. Without a deadline, the project can stretch out for too long. And people may not have a clear view as to how and when to finish the project.
An easy development schedule
At any time throughout the project, you will be aware of which features will be put into practise. Additionally, you’ll be able to detect any delivery delays.
So it becomes easy to stay on track and complete the development process right on schedule. Without an easy-to-follow schedule, it is tough to keep track of all the tasks that need to be completed, and that too within time.
Little to no supervision is required from the client
You can delegate project management duties to the developer team now that all the project specifics have been established. You don’t have to constantly watch over things, so you can limit how much you participate.
Cons of the fixed price model
Lengthy planning period
This contract model is not for you if you are in a rush to deliver your product. The software company must plan features in great detail in order to make an accurate estimate, and this can take weeks or even months to define.
There is no room for modification or the addition of features once you have signed the contract. Consider a scenario in which a feature is no longer necessary or a new feature is required due to a change in market demand. Without negotiating each new feature and starting the planning process over, you won’t be able to change the project’s scope. The product delivery may experience a significant delay as a result.
Not fit for complex projects
The fixed price strategy performs effectively for smaller projects. The fixed model will be too stiff if your product is more sophisticated, such as an e-commerce website or a mobile app that runs on multiple platforms. Products with intricate dependencies, lengthy implementation processes, and complex functions require constant review, modification, and flexibility.
High chances of miscommunication
Communication that is unambiguous and concise is essential for success in a fixed price business. You can acquire something else from what you anticipated if you overlook a detail or the project requirements are unclear.
Now, analyzing these pros and cons, we can say that there are some pretty good benefits of the model. However, are the pros worth it, for such hefty cons?