Fixed price vs. block of hours: why the hourly model costs you more
On a block of hours, the vendor earns more the longer it takes. Sit with that for a second.
A block of hours sounds flexible, but it has a deeper problem: it aligns the incentives badly. Whoever bills by the hour gains nothing from being fast. At dba.mx we work on a fixed price with a hard cap, and here is why that usually serves you better, no embellishment.
01 The incentive runs backward
By the hour, efficiency punishes the person offering it. On a fixed price, finishing well and finishing fast is good for both sides.
02 The risk changes owner
With a hard cap, if the work gets complicated the extra cost is absorbed by the vendor, not you. That is precisely their job.
03 You can actually budget
Your CFO approves a single number, not a range that reveals itself at the end. No surprise invoices.
04 When hourly does make sense
For loose support or exploration with no clear scope, a block of hours makes sense. For a project with a defined goal, almost never.
// A typical case (illustrative)
Picture a project estimated at 200 hours at USD 60 an hour: USD 12,000 on paper. If it gets complicated and reaches 320 hours, you pay USD 19,200. On a fixed price with a hard cap, your number stays the one you agreed to. The difference is absorbed by whoever knows the subject.
Illustrative example with typical market figures, not a specific client.
// next step
Tell us about your project and we give you a fixed price with a hard cap. That number is what you pay.