You’re talking to a US prospect. You’ve nailed the demo. The proposal looks great. And then comes the big question. So, do you work on fixed price or time and material? Sound familiar? It’s a question that confuses a lot of software founders. You want predictability. The client wants flexibility. But which model actually works best, especially for US clients. Let’s break it down. Hi, I’m Tabish Biker and I coach and mentor founders of software companies to scale globally, profitably, and sustainably.
After working with over a 100 Indian software service businesses and following what most people say about pricing models that actually work, here’s the reality. There’s no onesizefits-all answer. But there’s a smarter way to choose. First, let’s understand the US buyer. When a client says fixed price, they’re not just asking for a number. They’re really asking for clarity, reliability, and risk transfer. They want to know, will this go off track? Will I keep getting change requests and invoices? Will I
have to manage scope creep? So fixed price feels safer to them, but it comes at a cost. On your end, you take on the risk. If estimates go wrong, you’re bleeding. Unless the scope is tightly defined, fixed price can kill your margin. Now, here’s what works well for most successful Indian software companies working with US clients. Start with a discovery sprint. A small fixedpric engagement to define scope, timelines, and architecture. This helps to build trust, gives the client visibility, and gives you clarity.
Typically, this is a 2 to 3 week engagement where you deliver user stories, technical specifications, and a detailed road map all for a clear upfront free of whatever maybe 5 to$15,000 US depending on project complexity. Then transition into a time and material model with structured weekly plans, transparent billing, and clear check-in. This works beautifully when the project has evolving requirements, which let’s be honest is almost always the case. If clients are hesitant about time and material, here’s
a powerful approach. Offer a not to exceed cap for each sprint or month. This gives them budget predictability while still allowing flexibility on requirements. Also, implement a no surprise policy. commits to flagging any scope changes or potential overruns at least a week before they impact billing. This dramatically increases client comfort with TNM. One of my clients, Vicram at Cloud Sync, struggled with the fixed price projects that consistently ran overestimates. After switching to this hybrid model, a twoe discovery
followed by capp two TNM sprints, they increased their profit margins by 18% while actually improving client satisfaction scores. The key wasn’t the pricing model itself. It was the improved transparency and communication structure that came with it. But let me zoom out for a moment. We’re entering a time where value matters more than effort. More and more clients are asking, “What’s the business outcome you’re delivering for me? How can you keep moving the needle on my KPIs?” Not
just how many hours did your team spend this week. Eventually, the market will shift towards valuebased pricing. Clients will pay for the impact you create, not the time you log. And as a founder, if you want to move in that direction, you need to get very good at defining, communicating, and delivering measurable value. But for now, especially in the US market, here’s the takeaway. Use fixed price for discovery, PC’s or tightly scoped deliverables. Use time and material for anything open-ended, but layer it with clarity,
process, and confidence. It’s not the pricing model that wins. It’s the trust, communication, and value behind it that gets deals done. If this gave you clarity, like the video for me please and share it with your team and follow for more practical strategies on scaling software services from India to the world. Thanks for watching.
