In the world of outsourcing, engagement models hold great significance in defining the rules and regulations of an agreement between clients and software vendors. Basically, it establishes a professional relationship and looks into all the major aspects of your project, such as handling payments, degree of control, terms of collaborations, and obligations. All in all, the engagement model you choose plays a crucial role in determining the success of your project.

The most common engagement models in custom software development from a company include the Fixed Price model, Time and Materials model, and the Dedicated Teams model. Here goes an in-detail review of each model with respective pros and cons.

1. Fixed Price Engagement Model


The fixed price model is known for its predefined requirements, fixed time frame, and specific budget. The time frame and budget are decided to keep in view the scope and design of the project. Usually, clients put their requirements on the table, and together with the company, professionals hold great length discussions. This model makes sure no vital details are skipped.

Once the company assesses the needs and objectives of the client, they formulate a proposal including details of the project processes, resources, outcomes, timeline, and costs, etc.


Here’s what’s great about the fixed price model:

Tight Control over the Costs

The best thing about the fixed price model is that upfront costs are decided right initially, so there is tight control over the project costs. After careful deliberations, clients and developers reach the cost conclusion so that you never run out of the resources and undergo successful completion of the project.

Higher Visibility and Transparency

On the client’s end, the fixed price model allows higher visibility and transparency. With the set timeline in hand, you are certain about the progress and project deliverables at every point in the project.

Requires Little Client Supervision

As all your requirements are catered right at the start, you can focus on your core business aspects. This way, you need not invest a lot of time in any outsourced project.

Certain Final Outcomes

In the case of a fixed price model, you are highly certain about the end product and final outcomes. With a strict control and agreement follow up, there is little room for any surprises or uncertainties.


Here are a few cons of the fixed price engagement model:

Little to No Flexibility

As your requirements are practically set, there is little to no flexibility in such a strict environment. In this model, the best course is to stick with your original set of requirements.

High Communication Gaps

Less communication and supervision throughout the project results in a communication gap between client and developer. Sometimes, it leads to an unclear understanding of the objectives and project progress.

2. Time and Materials Engagement Model


The time and Materials Model is, in its true sense, an engagement model. Given its interactive and adaptive nature, the cost is decided over the number of hours spent and resources used. Usually, the client and developer set a fixed hourly rate, which determines the project’s total cost in the end.

It allows better engagement, iterations, effective communication, and a flexible environment.


The pros of the Time and Materials model are:

Pay for the Services You Use

In this model, the client only pays for the project outcomes. The total cost amounts to the number of work hours multiplied by the decided hourly rate and any additional expenses incurred during the project. Nothing more, nothing less!

Higher Degree of Flexibility

This model allows the client and software vendor to stay in touch, communicate the needs and objectives regularly, and come up with the best solutions.

More Control

The time and Materials model gives more control into the hands of the client. You can be involved throughout the project and keep a close eye on the development.


The cons of the Time and Materials model include:

No Set Timeframe

With no set timeframe, it is usually hard to deduce the completion of the project. It also adds room for inefficiency. The on-and-off availability of the development team usually slows down the process.

Unprecise Cost Estimations

With no specific requirements and timeframe, it is usually difficult to estimate the costs. In the end, the cost might come out to be a lot higher than your budget.

3. Dedicated Team Engagement Model


If you are looking for a dedicated team that works in-house, the dedicated team engagement model is the best option. You have a team of professionals dedicating all their time and effort to your project. This results in timely completion and great communication between client and vendor.

Usually, the client and vendor decide on the frequency (daily, weekly, etc.) and rate of the services and resources. Other than this, the objectives, project scope, timeframe, and budget, etc. are agreed upon beforehand. After a mutual discussion and agreement, the implementation of the project starts.


The pros of the Dedicated Team model are:

Highly Cost-Effective and Engaging

With this model, you get an in-house team without actually having to hire an in-house team. Working in the same work environment as you, the developers greatly understand your goals and requirements.

Given the flexible nature of this model, it allows seamless communication and a higher degree of collaboration. In the end, it turns out to be highly cost-effective.

Control over Resources

In this model, the client is usually in charge of the resources and, therefore, can exert complete control over the purchase, management, and distribution.


Not Suitable for Short-term Projects

This model only works best for long-term custom software development projects.

Requires Continuous Client Dedication

Having an in-house team means you will have to dedicate time and effort at every stage of the project. You need to make sure that your actual in-house team and the outsourced team gets along.



When it comes to choosing the right engagement model for your project, you need to consider all the significant factors, such as the size of the project, duration, goals, and objectives. Only then you can pick the right IT outsourcing company, such as FortySeven Software Professionals, to cater to your custom software development needs.