Outsourcing Mistakes: Negotiating Terms (Billing Type)

This video is about making mistakes when choosing a payment type. The main problem is this: people assume that if they set a fixed price, their risks are hedged. As far as your financial risks are concerned, this is true. But there is another side of the coin – in the product development, a lot of unknown details appear, which leads to the expansion of the project. Cost fixing limits your project’s growth.

A few recommendations:

• Be flexible – the waterfall development model doesn’t work anymore!
• Move towards the goal in short sprints – it has long been proven that it is impossible to predict the project’s scope at the very beginning.
• Be ready for changes (sometimes as early as week one or two into development).
• Do not choose a fixed price if your project will last for 4 months.

If you do choose a fixed cost, make sure that all requirements, expected results, and order acceptance criteria are also fixed.