How We Work
Engagement Models
Choose the model that fits your project: fixed scope, flexible T&M, or a dedicated team.
Fixed Price Model: High Risk, High Reward
Because you are absorbing the risk of delays and scope creep, your margins here must be the highest to protect your business.
Pricing Strategy
- Cost-Plus + Risk Buffer: Calculate your estimated internal cost (hours × internal resource cost) + overhead + desired profit margin + a strict 20% to 30% risk buffer.
- Value-Based Pricing: If the software will generate massive revenue or save the client significant money, price based on the value delivered rather than just the hours worked.
Target Gross Margin: 35% to 50%.
Pro-Tip
Never agree to a Fixed Price contract without a rigorous, signed-off Statement of Work (SOW) and a clearly defined Change Request (CR) process. If the client asks for an extra feature, it triggers a CR and costs extra.
Time & Materials (T&M): The Steady Earner
This is your bread and butter for ongoing work. The client pays for exactly what they use.
Pricing Strategy
- Tiered Rate Cards: Create an hourly or daily rate card based on the role and seniority (e.g., Junior Developer, Senior QA, Lead Architect).
- Blended Rate: Sometimes clients prefer simplicity. You calculate an average "blended" hourly rate across the whole team (e.g., $45/hour) regardless of who is doing the work.
Target Gross Margin: 25% to 35%.
Pro-Tip
Invoice bi-weekly or monthly on strict net-15 or net-30 terms. Do not let T&M invoices pile up, or you essentially become an interest-free bank for your client.
Dedicated Development Team: Volume and Predictability
Here, you are selling guaranteed availability. It is a volume game with highly predictable, recurring revenue.
Pricing Strategy
- Monthly Flat Fee: The client pays a set monthly fee per developer (e.g., $5,000/month for a Mid-Level React Developer).
- Cost-Plus (Transparency Model): You show the client the developer's actual Indian salary, and the client pays that salary plus a fixed monthly vendor markup (e.g., Salary + $1,500/month management/infrastructure fee). Onshore clients love the transparency of this model.
Target Gross Margin: 20% to 30%.
Pro-Tip
Because margins are slightly lower, profitability relies on retaining clients for 12 to 24+ months. Offer a small discount (5–10%) if the client signs a 12-month lock-in contract.