{"head":{"title":"What Is a Fixed-Price Software Contract? | OceanLab","description":"A fixed-price contract sets the price for an agreed scope up front. How it moves risk, when it fits a software build, and the mistakes buyers make with it.","canonical":"https://oceanlab.in/glossary/fixed-price"},"crumbs":[{"name":"Home","path":"/"},{"name":"Glossary","path":"/glossary"},{"name":"fixed-price contract","path":"/glossary/fixed-price"}],"slug":"fixed-price","term":"Fixed-price contract","aka":["fixed-bid","fixed-scope contract"],"category":"Buying software","short":"A contract where the price for an agreed scope is set up front.","body":[["In a fixed-price contract the buyer and the supplier agree a scope, a price and usually a timeline before work starts. If the work takes longer than planned, the supplier carries the extra cost. If the buyer wants something new, it goes through a change request."],["It is the opposite of ",{"href":"/glossary/time-and-materials","text":"time and materials"},", where you pay for the hours actually worked. Many software contracts mix the two: a fixed price for a well-defined phase, then hourly or milestone billing for what follows."]],"why":["A fixed price makes budgeting simple and moves overrun risk to the supplier. The trade-off is that the supplier prices that risk in, and every change has to be negotiated. It works when the scope can be written down clearly, which is why teams often fix the price only after a discovery phase or a ",{"href":"/glossary/clickable-prototype","text":"clickable prototype"},"."],"example":["A logistics company agrees a fixed price for a driver app covering login, job list, proof of delivery and offline mode. Halfway through, they ask for route optimisation. That is outside the written scope, so it becomes a change request with its own price and date."],"inBuild":null,"mistakes":[["Fixing the price on a vague scope. Both sides end up arguing about what was included."],["Leaving out acceptance criteria. Without them nobody can say when a feature is done."],["Assuming fixed price means fixed outcome. It fixes what was written, not what you meant."]],"related":[{"href":"/glossary/time-and-materials","label":"Time and materials (T&M)","detail":"A contract where you pay for the hours actually worked, at agreed rates."},{"href":"/glossary/clickable-prototype","label":"Clickable prototype","detail":"A set of linked screens you can click through, built to test a design before the real software exists."},{"href":"/glossary/mvp","label":"MVP (minimum viable product)","detail":"The smallest version of a product that real users can use, built to test whether the core idea works."},{"href":"/glossary/total-cost-of-ownership","label":"Total cost of ownership (TCO)","detail":"Everything a piece of software costs over its life, not just the price to build or buy it."}],"tools":[{"href":"/tools/fixed-vs-time-materials","label":"Fixed price vs time and materials","detail":"Free tool"},{"href":"/tools/software-rfp-template","label":"Software RFP template","detail":"Free tool"},{"href":"/tools/change-request-template","label":"Change request template","detail":"Free tool"}],"links":[{"href":"/software","label":"Software by industry","detail":"Systems we build per industry, with guides and tools."},{"href":"/embedded-engineers","label":"Embedded engineers","detail":"OceanLab engineers working inside your team."}],"sources":[],"legal":false,"updatedAt":"2026-10-25"}