Let’s consider how app dev consultancies bill their clients today. Generally, they have two standard options: fixed bid or hourly/time-and-materials. Fixed bid offerings mean that the customer comes to you with a spec or a request for proposal (RFP). You size it up, estimate that it will cost you about $300K to develop, and then say that you’ll do it for $500K. If the customer agrees, you now absorb all of the risk with relatively limited reward. After all, you’ll get the $500K from them whether it costs you $300K or three million. For this reason, most firms avoid fixed bid arrangements for
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