This approach to procuring software applications involves paying a development firm for the actual time spent and materials consumed in project execution. Unlike fixed-price arrangements, costs are not predetermined. For instance, a company might engage a team of programmers, designers, and project managers on an hourly basis, reimbursing expenses for tools, software licenses, and other resources used during the development cycle.
The value proposition lies in its adaptability and transparency. This model enables businesses to accommodate evolving requirements and changing priorities throughout the project lifecycle. The detailed billing provides visibility into resource allocation and spending, fostering trust and accountability. Historically, it gained prominence as a response to the limitations of rigid, pre-defined contracts in complex and rapidly changing software landscapes.
