Fixed price vs day rate for MVP development

The pricing model on an MVP contract decides one thing above all: who pays when the work takes longer than expected. Most MVPs take longer than expected at some point, so this is not a small detail. It matters as much as the number on the quote.

This article is part of my guide to how to build an MVP. For what the total is likely to be by type of product, see what an MVP costs in the UK. This is about how that total is structured.

How each model works, in detail

Day rate

You pay for time. A developer charges a set amount per day, or per hour, and invoices for the days worked, usually weekly or monthly. The scope can change freely, because you are buying time rather than an outcome.

What that means in practice: if the work takes 30 days, you pay for 30. If it takes 40, you pay for 40. The developer has no financial reason to finish sooner, and no financial penalty for finishing later. Most are professional about it, but the incentive is worth knowing.

Fixed price

You pay for an outcome. The developer quotes one price for an agreed scope, and if it takes longer than they thought, that is their cost, not yours. The scope has to be written down clearly, because it is what the price is for. Changes are priced separately.

What that means in practice: you know the cost before you start. The developer has a reason to finish efficiently, and a reason to push back on changes that were not in the scope. The quote includes their allowance for risk, so it can look higher than the same work at a day rate if everything goes perfectly.

Capped day rate

A middle option. You pay a day rate, but with a ceiling on the total, or a cap per milestone. You keep some flexibility, and the developer shares some of the risk. It works well when part of the scope is clear and part is not.

Monthly retainer

After launch, some developers offer a fixed monthly fee for ongoing work, usually limited by the number of requests or hours. It suits steady improvement better than a one-off build.

Current UK rates

Day rates vary by role, seniority and location. These are the most useful public figures I could find for UK contract work.

ITJobsWatch figures are based on advertised contract rates, and YunoJuno's are from its own platform, so they measure slightly different things. Both point to roughly £500 to £530 a day for an experienced UK developer. At a 7.5 hour day, £529 is about £70 an hour.

Most MVPs also need design. If you hire a developer and a designer separately, add the designer's days to the total.

A worked example

Say an MVP is estimated at 30 days of development.

• Day rate at £529: 30 days is £15,870. If scope moves and it overruns by eight days, the total is 38 days, or £20,102. You pay the difference.
• Fixed price: the developer might quote somewhere above £15,870 to allow for the risk of overrun. If it overruns, the price stays the same. If it finishes early, the price also stays the same.
• Capped day rate: £529 a day with a cap of, say, £18,000. You pay for time up to the cap, then the developer carries the rest.

The quotes in this example are illustrations, not market data. The point is the shape: a fixed price trades a slightly higher headline for a known total.

Side by side

Which one suits an MVP

For a first version with a clear scope, I think a fixed price is usually the better deal for the founder. You can plan around a known number, you have a written list of what you are getting, and the developer has a reason to keep things moving.

A day rate makes more sense when the work genuinely cannot be defined yet: research, a technical spike to see if something is possible, or ongoing improvements after launch. It also suits founders with a technical co-founder who can direct the work day to day.

The catch with fixed price is that it needs a scope. If you ask for a fixed price on a vague idea, a careful developer will either decline, add a large buffer, or suggest a paid scoping phase first. All three are reasonable responses. How to scope an MVP in one afternoon gets you most of the way there.

There is a useful idea from Basecamp's Shape Up method here. It fixes the time and lets the scope flex, rather than fixing the scope and letting the time slip. A fixed price MVP works best with the same mindset: agree the budget and the date, and treat the feature list as something to trim if needed, not something to add to.

Change requests and payment terms

Whichever model you choose, write down how these work before you start.

1. 1

   Define what counts as a change

   Swapping one similar feature for another is often absorbed. Adding a new feature, a new type of user or a new integration is a change.

2. 2

   Price changes in writing

   Each change gets a short written note: what it is, what it costs, and what it does to the date. Nothing starts until you agree.

3. 3

   Tie payments to things you can see

   A deposit to start, then milestones you can check: approved designs, a working preview, launch. Avoid paying everything up front.

4. 4

   Agree what happens at the end

   How long bugs are fixed for free, what ongoing work costs, and how the code and accounts are handed over.

On timelines, how long it takes to build an MVP explains which decisions add weeks. Most of them are scope changes, which is why the change process matters so much.

Questions to ask about pricing

When you get a quote, ask:

• Is this fixed, a day rate or capped?
• What exactly is included, as a written list?
• What is excluded: design, hosting, content, legal pages, post-launch fixes?
• How are changes priced, and who decides whether something is a change?
• How are payments split, and what triggers each one?
• What does it cost to run each month after launch?

There are more in questions to ask before hiring an MVP developer.

How I price

I work on a fixed price. The MVP Build starts from £12,000 and typically goes live in 4 to 6 weeks, depending on scope. You get the exact number in writing after a call and a short scope, before you pay anything, and it is 50% to start and 50% on launch. If the idea is not defined enough to fix a price, the Validation Sprint, from £3,500 over 1 to 2 weeks, produces the scope and a fixed quote. After launch, Build Club is a monthly fee of £4,500 for ongoing work, one request at a time.

All three are on the pricing section. To get a rough number for your own scope first, use the MVP cost calculator.