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Fixed vs. hourly: Which is best?

By Published on .

Should you negotiate a fixed price or hourly fee for Web site development? A single price may work well for corporate newbies, but experienced Web marketers swear by time and materials pricing.

Curt Wilson, creative service director for Lucent Technologies, Murray Hill, N.J., has a "certain level of distrust" about a lump sum. "Particularly with creative work, which is the most expensive, hourly rates let you size your expectations and determine where to cut," he says.

Hourly rates also avoid scope creep, which is typical with most first-year Web projects. "Over the six- to 12-month life cycle of the project, companies' specs inevitably change. This means new charges," warns Amy LeBan, director of marketing strategic relations of Eagle River Interactive, a Chicago-based Web developer.

If your contract is strict, vendors will drag their feet, Ms. LeBan says, adding, "Time and material charges give us more breathing room."

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