Fixed Cost Vs Dedicated Development: Which Engagement Model Should You Choose?

Advantaltechnologies
3 min readFeb 11, 2022

When a client enters into a partnership with a custom software development company, they need to decide how they would engage with the company as per the requirement and scope of their project. The engagement model should work for both parties.

What is an Engagement Model?

An engagement model defines how an organization that provides software development services to external clients engages with its clients. It also involves a legally binding contract that documents the commitments, flexibilities, controls, and duration of their engagement.

The focus of a client engagement model is to fulfill the requirements and goals of the business (client) that needs the software.

Since every software development project is unique, choosing the most appropriate engagement model is crucial to the project’s cost-effective and timely completion. Based on the scope and cost of app development, the following two types of engagement models are most prevalent:

  1. Fixed Cost Engagement Model
  2. Dedicated Development Facility Model

Apart from the objective parameters like cost and complexity of the software solution, there are some subjective factors like the client’s rapport with the software development services.

Let’s compare fixed cost and dedicated development in slight detail.

Fixed Cost Engagement Model

In the fixed cost engagement model, the offshore custom software development company and the client mutually agree on a clearly-defined scope, requirements, and deadlines of the project modules for a fixed cost.

The model is ideal for limited-scope software development projects with precise and predictable requirements and specifications.

Advantages of Fixed Price Engagement Model

Predictability — The client can estimate their expenses for the next 1–3 months.

Simplified Workflow — The project gets broken down into predefined modules, making the workflow clear and straightforward.

Transparency — The client and the software development team gets a transparent view of the project thanks to the clearly defined requirements and specifications of each module and component of the software.

No Additional Cost — In the fixed price (cost) model, the client doesn’t need to pay any amount over the predetermined fee.

Dedicated Development Facility Model

When you require total control over the people and technical resources involved in the development process, the dedicated development facility model is the best option for you.

The dedicated development model provides the client with a high level of flexibility and scalability. Consequently, it is the better-suited engagement model for clients working with an offshore software development company.

The dedicated facility offers leverage to the client’s in-house engineering team. The client gets access to more versatile skills and resources at the facility.

The client can profit from a shorter time-to-market when the communication is consistent in this model.

Advantages of Dedicated Development Facility Model

Flexibility — Dedicated development model gives the client the ability to modify the project scope as per the feedback and changing scenario.

Additional Expertise — Clients get to tap into the expertise of the best offshore software development services and help their in-house teams upskill.

More Control — The client gets complete control over the resources allocated to their project’s development. They also get the ability to monitor the progress in real-time.

Cost-efficiency — The trusted global IT service provider will handle all project requirements such as resources, hiring (offsite and onsite), infrastructure, and admin support. It saves the client a great deal of time and money on non-productive activities.

The Hybrid Engagement Model

At Advantal, we collaborate with our clients on various engagement models. We also offer a hybrid approach apart from the standard fixed cost and dedicated facility setups.

The business analysis team (BA team) engages with the client on a dedicated facility model under the hybrid engagement model. The team assists the client in defining the requirements, deciding the pricing, and determining the deadlines.

There is a standard change protocol for all modifications made throughout the development process, which we handle through a change control mechanism.

Final Thoughts

The client can choose the right-fit engagement model after a thorough decision and understanding of all the requirements. However, always look at the broader perspective. In all the engagement settings, the trustworthiness, experience of the custom software development company, and clear communication are most critical.

Originally published at https://advantaltechnologies.com on February 11, 2022.

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Advantaltechnologies

Advantal Technologies is a leading software development company that builds software for large firms and SMEs to enhance online productivity.