The smart money series: 5 reasons why you should still have fixed-fee contracts

Work with care (LOC)A few weeks ago, we talked about the traps of fixed-fee contracts. In this post, let’s talk about why we should keep fixed fee contracts.

  1. Stable revenues. Fixe fee contracts are revenue the client has committed to providing you. Contrary to time and material contracts which can dry up with no notice, with fixed fee, the length of the project and the amount to bill is already spelled out.
  2. 2.       Predictable work. Fixe fee contracts – at least when they are scoped right – provide a detailed, precise description of the work to be done. This makes planning your workforce needs easier.
  3. Clients that trust you. From the client side, signing a fixed fee contract means they already know what the project will cost. They can allocate the budgets before the work starts. It creates a trusting relationship with the client, who wants nothing less than surprise fees in the project.
  4. Relationship builder. Doing a fixed fee project with a client creates a trusting relationship at first, and eventually can turn into bigger contracts or even a retainer-based contract. The fixed fee contract is a trial, a way for the client to get to know you, and vice versa.
  5. Practices good estimation skills. Because fixed fee is so final, doing those contracts helps getting better at estimating costs and profit margins.

What about you? What’s your take on fixed fee contracts?

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