Fixed price

A contract where the supplier agrees one price for the whole job or each milestone, and carries the risk if it takes longer. Common for websites and well-defined builds.

Also called: Firm fixed price (FFP), Lump sum

Related terms

Time and materials

A contract paid by the hours or days worked at agreed rates, plus costs. Common for IT staffing, support and agile development where the scope will change.

Milestone

A checkpoint in a contract, often tied to a payment, such as “design approved” or “go-live”. Fixed-price software contracts are usually paid by milestone.