Fixed Bid vs Time and Materials vs Dedicated Team

Author: Savas Tutumlu, Co-Founder & CTO

Experience: Structured dozens of fixed‑bid, T&M, and dedicated team deals from both client and vendor side

Published: November 17, 2025 • Reading time: 11 minutes

The wrong pricing model can kill a good project. Fixed‑bid on fuzzy scope leads to change‑order wars. Pure hourly on a large, complex build can drift for months. Dedicated teams without clear product ownership burn money.

This guide pairs with our 2025 pricing guide and engagement overview to help you choose a model that fits how clear your scope is—and how much risk you’re willing to carry.

Quick Answer: When to Use Each Model

  • Fixed‑bid: Best for well‑defined, short‑to‑medium projects (2–4 months) with stable requirements.
  • Time & Materials: Best for exploratory work, prototypes, or when requirements are expected to change frequently.
  • Dedicated team: Best for long‑term roadmaps (6–18+ months) where you need consistent capacity and deep product context.

1. Fixed‑Bid Projects

Fixed‑bid means you agree on a defined scope, price, and (usually) approximate timeline up front.

Pros

  • Budget predictability for finance.
  • Clear deliverables and acceptance criteria.
  • Vendor has strong incentive to deliver efficiently.

Cons

  • Change requests can be expensive and slow.
  • Vendors may pad estimates to cover unknowns.
  • Risk of misaligned expectations if the spec isn’t detailed.

Fixed‑bid works best when you’ve done some homework: discovery workshops, RFP, and a clear feature list. See our RFP template for the level of clarity you should aim for.

2. Time & Materials (T&M)

In T&M, you pay for actual hours worked at agreed rates.

Pros

  • Maximum flexibility as scope evolves.
  • Easier to experiment and change direction.
  • No need for exhaustive up‑front specifications.

Cons

  • Budget is less predictable without strong governance.
  • Requires disciplined product ownership on your side.
  • Harder to compare vendors purely on headline numbers.

T&M is ideal when you’re still validating product/market fit or exploring multiple options—as long as you put guardrails in place (weekly caps, regular checkpoints, clear priorities).

3. Dedicated Team

A dedicated team is effectively an embedded product squad—designer(s), engineers, QA, often a product owner—assigned to your roadmap for months at a time.

Pros

  • Deep product context and faster decision‑making.
  • Predictable monthly spend and capacity.
  • Ideal for continuous delivery and multi‑phase roadmaps.

Cons

  • Higher monthly commitment than a short fixed‑bid project.
  • Requires a clear roadmap and someone on your side to steer priorities.
  • Harder to “turn off” quickly without planning.

We often shift clients to dedicated teams after an initial fixed‑bid MVP proves out—and when we move into ongoing work across US & Canada markets.

4. Choosing the Right Model for Your Project

Ask yourself:

  • How clear is our scope today?
  • How hard is our budget ceiling?
  • How long will this initiative realistically run?
  • Do we have internal product leadership?

Then apply this rule of thumb:

  • Clear scope + hard budget + 2–4 month project → Fixed‑bid.
  • Unclear scope + experimentation → T&M with guardrails.
  • Long‑term roadmap + internal product owner → Dedicated team.

5. Hybrid Models That Often Work Best

Many of our most successful engagements are hybrid:

  • Fixed‑bid discovery + MVP, then T&M or dedicated team for iteration.
  • Fixed‑bid for well‑understood modules, T&M for experimental features.
  • Dedicated team with fixed‑price milestones tied to major releases.

When you evaluate proposals (see our guide on comparing proposals), ask vendors which hybrid they recommend and why.

6. Next Steps

To choose a model with confidence:

If you’d like, we can walk through your project on a short call and recommend which model fits your situation—sometimes that answer is “you don’t need us yet, just configure SaaS tools,” and we’ll happily tell you that.