The Three Pricing Models
1. Fixed Price
Best for: well-defined, scoped projects.
Risk: Scope creep kills your margin. Guard with a detailed spec and change order process.
2. Time & Materials (T&M)
Best for: ongoing work, fuzzy requirements, long-term relationships.
Risk: Clients feel uncertain about final cost. Mitigate with weekly billing and clear progress reports.
3. Value-Based Pricing
Best for: experienced agencies with clear ROI metrics.
You price based on the value delivered (e.g., "this e-commerce redesign will increase conversion by 20%, worth $500K/year to you") not hours spent.
Our Current Approach
We use Fixed Price + Discovery Phase. A paid discovery (1-2 weeks) scopes the full project before committing to a final price. This protects both sides.
Red Flags That Blow Budgets
- Vague requirements ("make it modern")
- No decision-maker in client meetings
- "Small changes" requests piling up
- Unclear acceptance criteria