4 Simple Software Development Pricing Models worth Knowing

Building software from scratch can be an intimidating challenge for companies. The process doesn’t stop once a code has been successfully written and executed – that is only just the start! Once your foundation has been laid, then comes designing, planning, testing, deployment and analysis of projects. Achieve robust application development first requires understanding different pricing models available before beginning this endeavor.

Fixed Price, Time and Materials, Mixed Model and Dedicate Team are four pricing models that can revolutionize custom software development projects: fixed price, time and materials, mixed model and dedicated team. Let’s examine each in more depth so you can start your projects off on the right foot with full knowledge of project development phases. Here we will go through

4 Simple Software Development Pricing Models Worth Knowing

  • Fixed Price Pricing Model
  • Time and Material Pricing Model
  • Mixed Pricing Model
  • Team Pricing Model

1. Fixed Price Pricing Model     

This pricing model addresses all technical and business requirements for product releases, deadlines and budgets. The primary goal is to keep to the project plan laid out; any deviation can cost both time and money, leading to extra work pressure, late delivery of delivery of budgetary changes. Project planning and accurate cost information are two crucial aspects in this pricing model – you cannot enter project development stage without first outlining project goals, specifying technical requirements and designing mockups.

However, this model carries with it some risks; meeting deadlines and requirements may prove challenging at times. Responsibility here lies with the service provider to ensure operations run smoothly while meeting time and budget constraints of the project at hand.

Fix pricing models should only be considered when your project meets specific conditions. First and foremost, your site or application needs to be developed in a short term project of two months or less with limited budget and timeline requirements. Next, all technical documents such as mockups, features, functionality and user journey maps must be available immediately for use during development. Thirdly, requirements of job won’t change, remaining consistent with initial plan. Fourthly, agree on scope in advance by delegating requirements while waiting for results of software.

2. Time and Material Pricing Model   

This pricing model offers maximum flexibility by charging you for only those hours spent working on the project. Budget estimates, activities to be performed, work to be completed and timeline are all discussed before beginning a project, but due to its flexible nature changes or modifications may still take place later. Payment for projects are settled monthly. What makes this model particularly appealing is the quick alterations and scope changes without incurring higher costs or overextending time periods. Furthermore, you can view results during development without hindrance while monitoring day to day progress to get precisely the software solution your business requires.

Under certain conditions, fixed pricing models can be the better choice. When finalizing all requirements of project development in its early stages is difficult and you require changes along the way; and when project development takes more than 2 months with technical specifications and requirements continuously evolving without limited time or budget constraints; also when having authority to control project scope and decide budget accordingly and having direct influence over its scope along with an urge to get going as soon as possible are factors.

3. Mixed Pricing Model

This pricing model combines elements from both fixed price and time and material pricing models, with tight deadlines while still allowing some room for flexibility. It’s ideal when there is a set time frame in which the product needs to be released but the requirements for its release have yet to be defined or are unclear; using this pricing method allows the ability to alter scope, manage costs and make multiple revisions happen simultaneously.

Under certain conditions, mixed pricing models should only be considered. Your project needs to serve one of three objectives. Either it needs to launch digital solutions quickly onto target market audiences; its size must fall between short- and medium-term; or you have limited involvement but still want the best set of results within limited time frames. Finally, having input, feedback, or responses into its development stage.

4. Team Pricing Model  

This pricing model offers one of the greatest benefits – excellent control. You are able to personally interview members of your team and assess their strengths and weaknesses so you can build the ideal team according to your specifications. Increase or decrease the size of your team as needed and replace old resources with new resources as desired. Communicate effectively with all team members by assigning tasks and soliciting their input on matters. By building up a dedicated team, it’s almost like creating your own in-house team; rather than recruiting staff and purchasing software licenses separately, the focus remains solely on enjoying services offered. Furthermore, pricing models of dedicated teams are highly flexible with monthly salary payments being approved by you directly for employees working for them.

Under certain conditions, dedicated team pricing models are appropriate. First and foremost, when your project falls into certain parameters you want a direct impact in its development phase; those with experience and training in project management would make excellent selections for this model. Secondarily, controlling all budgets, finalizing scope of the project and managing its completion during development is of primary concern to you; lastly assembling a team should be your main aim as you look to hold face-to-face meetings and form one beneficial to completing tasks is of greatest significance to you and your tasks at hand.


The Digi Tech Resource Group was recently recognized as New York’s premier SAAS application developer. Since 2013, TDTRG has created numerous SAAS apps for clients in entertainment, gaming, software development and medical billing industries. If you would like a quote please reach out at info@tdtrg.com.

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