Fixed price
A fixed price engagement agrees one figure for a defined scope, regardless of the effort it takes to deliver. The supplier carries the risk of the work taking longer than expected. The buyer carries the risk of needing something that falls outside the agreed scope.
The arrangement suits work that is genuinely well understood. A defined deliverable, a clear boundary, and a supplier who has built something close enough before to estimate it. Both halves have to hold.
It suits exploratory work badly, and this is where it goes wrong. A fixed price on a poorly understood problem produces one of two outcomes. A price inflated to cover the unknown, or a supplier absorbing an overrun and trying to reduce what gets built.
Scope is therefore the entire contract. Everything that follows turns on what was included, which is why a fixed price arrangement needs the clearest written boundary of any commercial model.
Recording the hours still matters even though nobody charges by them. The effort a fixed price project consumed is the only evidence the next fixed price quote can be based on, and without it a firm prices the same kind of work from memory forever.
Where this shows up in PeopleMuster
PeopleMuster carries Fixed Price as a flag on a project and records every hour logged against it, so the effort each fixed job took stays on file.
Questions people ask
When does fixed price work well?
When the scope is genuinely well understood and the supplier has done comparable work before. Both conditions have to hold, and the second is the one usually assumed rather than checked.
Who carries the risk in a fixed price engagement?
The supplier carries the effort risk. The buyer carries the scope risk, and finds it the moment something needed was not in the agreement.
How does PeopleMuster mark a fixed price project?
With a Fixed Price flag on the project record, beside its billable flag, its milestones and its health score. Hours logged against it sit in the same timesheets as every other project.