Fixed-price or Cost-plus Billing?

Fixed-price

Suitable when the scope is clearly defined in writing and will not change.

Advantage: Planning certainty.

Disadvantage: The service provider bears the risk and incorporates it into the price – you pay a premium for uncertainty, even if it doesn't materialize. And every change becomes a renegotiation, which costs time and strains the relationship.

The hidden effect: With a fixed-price model, it's economically beneficial for both parties to narrowly define the scope. Good ideas that emerge during the project are then excluded.

Cost-plus Billing

Suitable when requirements clarify over time – which is the norm for software, not the exception.

Advantage: You pay for what is built and can reprioritize at any time.

Disadvantage: Requires trust and attention. Without regular alignment, you lose cost control.

The middle ground we recommend

1. Fixed-price for the concept. Manageable amount, clearly defined. At the end, you have a reliable estimate.
2. Implementation on a cost-plus basis with boundaries. An agreed maximum amount, at which point both parties jointly decide.
3. Billing in short segments. After each segment, you see a working version and know where you stand.

This way, no party bears the risk alone, and you can exit at any time without losing everything.

How to recognize an unserious fixed-price offer

It is named before anyone knows the processes. Whoever names a figure after a phone call has either included significant padding or plans to renegotiate later.