One of the biggest sources of friction in software development isn’t the code—it’s the contract.
When you hire an agency (whether in Dubai or Kerala), you will usually be offered two choices: Fixed Price or Hourly (Time & Material).
New founders often default to Fixed Price because it feels “safer.” But is it? Choosing the wrong model can lead to cut corners, bloated budgets, or a product that nobody wants.
Here is an honest breakdown of how to buy software services in 2026.
1. The Fixed Price Model
How it works: You provide a detailed Requirement Document. The agency gives you a set price (e.g., $15,000) and a set deadline (e.g., 3 months).
- The Pros:
- Budget Certainty: You know exactly what you will pay.
- Low Management: You don’t need to supervise the developers daily.
- The Cons:
- Rigidity: Software is unpredictable. If you realize halfway through that you need a “Chat” feature instead of a “Forum,” you can’t just swap them. You have to issue a “Change Order,” which costs extra and delays the project.
- The “Buffer” Cost: Agencies often add 20-30% to the price to protect themselves against unforeseen risks.
- Best For: Small MVPs, simple websites, or projects with crystal clear requirements that will not change.
2. The Hourly (Time & Material) Model
How it works: You pay for the time the developers spend working on your project (e.g., $30/hour). You receive detailed timesheets.
- The Pros:
- Total Flexibility: You can pivot strategy instantly. Did user feedback say they hate the “Blue” design? Change it to “Red” tomorrow. No contract renegotiation needed.
- Quality Focus: Developers aren’t rushing to finish just to protect their margin. They focus on writing good code.
- Start Immediately: You don’t need to spend months writing a 50-page spec document before starting.
- The Cons:
- Budget Variance: The final cost isn’t guaranteed. It requires trust in your partner.
- Best For: Startups, Agile projects, and complex apps where the scope will evolve as you learn.
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Worried about hourly rates? See how outsourcing to Kerala makes the hourly model affordable in our [Dubai vs. Kerala Cost Guide].
3. The “Dedicated Team” Model (The Enterprise Choice)
For larger projects (6 months+), there is a third option: Staff Augmentation.
- How it works: You “rent” a team of 3 developers, 1 QA, and 1 Project Manager from Noviindus. They work only for you, 40 hours a week.
- Why choose this? It’s like hiring in-house employees, but without the HR headaches, insurance costs, or laptop purchases. You get full control and loyalty.
4. Which One Should You Choose?
| If you possess… | Choose this model… |
| A strict, limited budget | Fixed Price |
| A clear, finalized spec sheet | Fixed Price |
| An evolving idea (Startup) | Hourly / T&M |
| A long-term product roadmap | Dedicated Team |
Conclusion
A contract should not be a cage; it should be a framework for success.
At Noviindus, we are flexible. Whether you need a fixed-cost MVP to show investors or a dedicated team to scale your enterprise, we have an engagement model that fits.
Not sure which model fits your idea?
