Dedicated teams vs. fixed-price: when each one wins
The wrong engagement model torpedoes good engineering. A practical guide to choosing between fixed-price, time-and-materials, and dedicated teams — based on what we've watched succeed and fail.
Engagement model = risk allocation
Every engagement model is a way of allocating risk between client and vendor. Fixed-price pushes risk to the vendor — and pressures scope. T&M pushes risk to the client — and rewards transparency. Dedicated teams split the difference and reward continuity.
When fixed-price wins
Tight scope, low ambiguity, defined success criteria. MVPs with a clear feature list. Discrete features. Anything where 'done' is binary.
When T&M wins
Discovery-heavy work. Research spikes. Anything where the right answer changes the scope. T&M with weekly caps is the safety valve here.
When dedicated teams win
Long-running roadmaps. Platform investments. Anywhere the value of accumulated context outweighs the marginal hour. We typically see dedicated teams come in around month three of an engagement.
Most engagements drift between models. The mistake is locking in one before you've understood the problem.