Dedicated Development Team Vs Fixed Price Model: What Is It And When To Hire It?

According to a report by Hiring Branch, the average cost of a single bad hire for the company is $14900. With a bad hiring strategy, you add to the hiring costs and delay your software development project eventually.

Moreover, you will find a team or individual who doesn’t align with the company’s culture or needs. This can lead to misfits within the organization, thus causing more issues for the project.

At a time when there is a need for speed to achieve your software goals, a single wrong hire can cause all possible issues. That’s why you must think through the hiring strategy and plan the most efficient engagement model for the upcoming project.

This guide will take you through the two most popular models- the fixed price or retainer model and the dedicated development team. We will also look at how companies are incorporating a third model that combines the best features of the two popular engagement models.

An Overview of the Dedicated Development Team Model

A dedicated development team model is where the client hires an entire team of remote developers, designers and project managers for their project. It is where they work with specialists in every facet and complement their in-house team with the right skills and infrastructure.

Using the dedicated development engagement model, clients can outsource specific requirements or project tasks that the in-house team is unable to manage. This engagement model helps build a team that is an extension of the existing in-house team.

The Key Features of the Dedicated Development Team Model

#1. A Committed Team

When you hire a dedicated team, you hire resources who work exclusively on your project. They will ensure dedicated and undivided attention on the project. They won’t be responsible for any other task or project. This ensures the timely completion and perfection of the software project.

#2. Flexible Resources

When you build an in-house team, you have a fixed number of resources available for the project. That is not the case when you hire a dedicated development team. You can add or remove the team members, thus making the engagement model flexible. You can choose the resources according to the current project needs.

#3. Immediate Communication

You or other members of the in-house team can directly connect and communicate with the dedicated development team. This assures real-time communication and fosters quick decisions.

#4. Long-term Engagement

This model helps you avail resources for a longer timeline. You can effectively use the resources for a project that goes beyond months. As they are dedicated to your project, they will help manage the evolving timelines and requirements as well.

#5. Skilled Resources

You can access highly skilled and expert professionals for the specific requirements of the project. They will be able to share their knowledge and help build the project effectively.

The Pros of the Engagement Model

#1. A dedicated team stays consistent throughout the project, which implies continuity. This is beneficial for long-term and highly complex projects.

#2. As the client manages the team directly, they have complete control over the project. They get complete visibility into the issues and progress of the project.

#3. The team understands the business and is aligned with the goal. As a result, they will be able to deliver more tailored solutions for the project.

#4. As they work full-time on the project, they are more productive and can deliver results faster.

The Cons of the Engagement Model

#1. Dedicated teams can be slightly expensive when compared with fixed-price contracts, as the amount depends on the skills hired, evolving requirements and other factors.

#2. The clients need to invest their time and effort into managing the team and the project. It isn’t completely outsourced, resulting in sufficient overhead.

#3. Your team and project depend on the external team. If they discontinue the services abruptly, it can cause issues for your project.

Examples of Dedicated Development Team Model

#1. This model is ideal for software development companies that aim to build new products and solutions.

#2. eCommerce businesses can use the dedicated team’s flexibility and expertise to launch and scale their businesses.

#3. Healthcare projects that need thorough legal and regulatory compliance checks will benefit from the dedicated model. This is because they work with your in-house team, reducing the risk of data breaches and other legal issues.

If you are planning to hire dedicated development team for your upcoming project, you should consider this only when there is a long-term project. They can easily rise to the challenges and adapt to the new requirements. moreover, the flexibility will help you scale the resources to match the new needs.

They can easily respond to market shifts and technological advancements while ensuring the continuity of the project. Moreover, as they are associated with your project, they have in-depth knowledge that helps with long-term project success.

An Overview of the Fixed Price Model

This fixed price model is where you will enter into a fixed agreement regarding payment and scope with the service provider. You can use this model if you have a clear and defined scope for the project you are planning. Moreover, it helps if the timeline is short and specific.

This is the perfect model if your project scope, budget and deadlines are thoroughly defined. it can help you achieve the entire project within the set timelines and budget.

The Key Features of the Fixed Price Model

#1. Pre-defined Scope

In this model, the requirements are perfectly defined, which allows you to plan the deliverables for defined milestones. This will allow you to be stringent on the budget and the resources.

#2. Fixed Budget

You would proceed with the entire model using a pre-defined budget. You will agree with your service provider on the amount you can pay for the particular project.

#3. Defined Timeline

As the scope and budget are fixed, the timelines are pretty strict in this case. you will be setting pre-defined timelines with milestones and deliverables to ensure smooth movement throughout the process.

#4. Restricted Involvement

You will be limiting your involvement in the project lifecycle. You will outsource the project to the development team or individual. They will be responsible from start to finish. You will receive the progress reports as scheduled.

#5. Risk Transfer

You will be transferring the risk of staying on the budget and meeting timelines to the service provider. The entire risk and ownership of the project will lie with the service provider.

The Pros of the Engagement Model

#1. As this model works on fixed costs, you will be able to model clear financial planning. This will help avoid unnecessary expenses for the business.

#2. The deliverables are defined in the planning stage, leaving no room for misunderstandings or scope creep.

#3. The clients can offload the tasks to the team, thus reducing their involvement in the project. This would help them stay more productive and focus on core jobs.

#4. The defined timeline and scope allow the entire budget and milestones to be more predictable. It helps plan the day-to-day activities better.

The Cons of the Engagement Model

#1. This model is inflexible, as it cannot adapt to changes in the scope. In case of scope changes, the entire process is expensive.

#2. There is a risk associated with the quality of the project. Your service provider may cut corners to stay on the budget.

#3. The projects are not adaptable, and may not be fit for projects with increased requirements or uncertainties.

#4. Owing to low levels of client involvement, you may face communication barriers that can cause misunderstandings.

Examples of Fixed Price Model

#1. The fixed price model is an excellent way to manage the maintenance costs of your fintech application. This would reduce the burden on the team and ensure you stay on budget.

#2. It is a good deal for mobile app designs where the specifications are clear and requirements are short-term.

#3. You can use it to create specific additions or upgrades to the existing app, where the scope is fixed along with the budget.

The fixed price model is an impactful way to manage short-term projects. They are best fit for projects that are predictable and controlled in multiple ways. in case the specifications are straightforward and the entire scope predictable, you can choose to go with a fixed price model.

Comparing the Two Engagement Models across Factors

When selecting the engagement model, it is crucial to consider the different factors that impact the success of your software project. The model should align with the budget, quality expectations, requirements of the project and organization’s long-term goals.

In this section, we will compare the two models against varying factors, such as flexibility, cost, quality and time management that are crucial for the selection.

At a Glance Comparison

Factors	Dedicated Development Team	Fixed Price Team
Flexibility	Highly flexible	Limited flexibility
Cost	Expensive for the short term. Can be relatively cost-efficient in the case of a long-term association.	Pre-defined budget with defined scope.
Quality	High quality products	The quality may vary and is risky
Time Management	Adaptive timelines	The timelines are specific and strict
Client Involvement	Involvement required for project progress	Limited to no involvement
Scalability	Highly scalable model	Scalability is limited
Risk Management	The risk is shared between the two models	The risk is assumed by the service provider
Intellectual Property	Continuous control, even after completion	Transferred to the client on completion of the contract.

Let’s look at the comparison of these models against the factors in detail.

#1. Flexibility

Dedicated Development Team: It is a highly flexible model wherein your team size and project requirements adapt to the changing business needs and shifting markets

Fixed Price Model: The scope is limited and restricted. You may not be able to change without adding to the timeline or cost.

The Better One: If you are thinking long-term where you might need to scale your resources up or down, you might want to take the dedicated team approach. For short-term projects, you should think fixed price model.

#2. Cost

Dedicated Development Team: As the dedicated team is involved full-time, the costs tend to be higher. However, if the team is involved long-term, they may prove to be cost-effective.

Fixed Price Model: There is a clear and defined budget for the entire project. It is ideal for projects that have a fixed scope and timeline.

The Better One: In the case of long-term projects, you can go with a dedicated team. However, for short-term projects, you must go with a fixed-price model.

#3. Quality

Dedicated Development Team: The quality is high and reliable as the team is continuously involved in the entire project. Their detailed understanding can help deliver a more stable and custom product.

Fixed Price Model: The quality may vary as the service providers need to complete the project within the timeline for the defined budget.

The Better One: If you want a high-quality and custom product, you might need to involve a dedicated team for the software.

#4. Time Management

Dedicated Development Team: The entire team is focused on a single project. As they are involved long-term, they can ensure they adapt the timelines to meet the newer requirements.

Fixed Price Model: The timeline is fixed and agreed upon during the contract signing. This is inflexible and perfect for short-term projects. In the case of complex projects, you may find it difficult to use the engagement model.

The Better One: When it comes to time management, the dedicated team model is flexible. It can easily benefit in the case of complex and large-scale projects.

#5. Client Involvement

Dedicated Development Team: The client is involved throughout the software/app development process. They are part of project management and decision-making.

Fixed Price Model: The client has limited involvement in the entire project. They get daily updates based on the initial requirements set.

The Better One: If you want to be a part of the entire project, you can choose a dedicated development team.

#6. Scalability

Dedicated Development Team: The engagement model allows you to make adjustments to team size based on the skill and resource requirements.

Fixed Price Model: You may observe limited scalability as the scope and team strength are limited. In case you want to add resources or scope, you might need to renegotiate the contract.

The Better One: In the case of scalability, the dedicated team is better as they can scale up or down without adding to the cost.

#7. Risk Management

Dedicated Development Team: The risk is shared between the client and the service provider. As a result, the entire control and project direction is shared. This can work towards enhancing the quality.

Fixed Price Model: The entire control lies with the service provider. They will be responsible for delivering on time and ensuring to stay on budget. However, in case of unexpected changes, you might notice the risk shifts back to the client.

The Better One: The shared risk is great as it involves both parties, which makes the dedicated team a better option.

#8. Intellectual Property

Dedicated Development Team: They have continuous control over the product or IP throughout the project.

Fixed Price Model: The property rights are transferred to the owner right at the end of the project. This is clearly defined in the contract.

The Better One: IP control depends on your needs. Dedicated Team ownership stays with you, and the fixed cost or price clearly transfers ownership.

When to Hire Each Engagement Model?

It is crucial to understand which engagement model works best for your software development project.

Dedicated Development Team

#1. Long-Term Projects

When you are developing a software product that requires continuous updates and feature additions, you might need to invest in a dedicated team. They can help with the creation of the product, its maintenance and updates.

#2. Requires Skilled Expertise

If you are developing a mobile application, and you need someone with AI expertise, you should go with a dedicated development team. It is also a good idea to go with the dedicated team if you want to customize your software product.

#3. Startups or Product Development

If you are a startup that needs to build a detailed product or want to build a SaaS solution, you must choose a dedicated development team.

#4. Uncertain or Changing Scope

In case you are working on a project where the scope is uncertain or continuously changing, you might want to go with the dedicated team.

Fixed Price Model

#1. Fixed Requirements

In case you are working on a short-term project with fixed requirements, you can go with the fixed cost model. This would help you reduce the costs and make it efficient.

#2. Small to Medium Scale Projects

Whether you are creating the microsite or adding features to a particular software product, you might need to work with a specific short-term goal. This can be done efficiently with a fixed-price model.

Case Studies for Engagement Models

#1. Reputed Healthcare Company- Dedicated Development Team

A reputed healthcare company wanted to build a telemedicine platform integrating health tracking devices and real-time consultations.

Using the dedicated development team, they were able to assemble the UX designers, healthcare compliance specialists and other team members.

With flexibility and consistency, they offer high-quality and reliable solutions. The company was able to launch the product on time and ensure a reliable performance.

They could communicate with the service provider and owing to that they were able to build some competitive features in the application.

#2. Retail Company- Fixed Price Model

A leading retail company wanted to add specific features to their holiday campaigns. Their requirements were clear and required short-term additions to the team.

As the price and scope were fixed, they approached the fixed price model for their software. They ensured a detailed budget for the project development. It also helped set the scope and requirements clear. It also helped ensure predictable outcomes.

They were able to deliver the project on time, ensuring a significant boost in traffic.

Read More: Top 10 Retail App Development Ideas for Startups

Conclusion

It is crucial to choose the right engagement model to ensure long-term project success. Between the two models, each has distinctive features which make them useful for your business project.

The dedicated team is flexible, and scalable and offers continuous involvement. However, if you use it for a short-term project, it can prove to be expensive. At the same time, a fixed price model can ensure quick completion within the timelines and budget.

The continuous involvement helps offer reliable products, which may not be possible in the case of a fixed price model.

The decision between a dedicated development team and a fixed price model is based on the project needs, scope and budget. You must analyse the benefits and challenges of the engagement model before selecting one.

If you are still unsure which model will work best for you, Expert App Devs can help you with it. As a leading mobile app development team, we can help you choose the right engagement model that supports your budget and requirements.

Check in with us for a free consultation to find the model that fits your project.