Fixed-Price MVP vs Hourly Retainer: Which Model Actually Saves You Money?

A practical guide for non-technical founders choosing how to pay for their MVP

You’ve validated your idea. You have funding (or savings). Now you need to build your MVP.

The first question every agency will ask: “Do you want fixed-price or hourly?”

And honestly? Most founders pick based on gut feeling, not strategy. They choose fixed-price because it feels “safer,” or hourly because it seems more “flexible.”

After helping 50+ founders launch their MVPs, we’ve seen both models work brilliantly—and both fail spectacularly. The difference isn’t the model itself. It’s whether the model matches your situation.

Let’s break down exactly when each model saves you money, when it costs you more, and how to decide.

The Two Models, Explained Simply

Fixed-Price (Project-Based)

You agree on a scope. The agency quotes a total price. You pay that price regardless of how many hours it takes them.

Typical structure:

• 30-50% deposit upfront
• Milestone payments (e.g., after design approval, after development)
• Final payment on delivery

Example: “We’ll design and build your SaaS MVP with user authentication, dashboard, and Stripe integration for €35,000. Delivery in 10 weeks.”

Hourly/Retainer (Time-Based)

You pay for time, not deliverables. This can be pure hourly (pay for actual hours worked) or a monthly retainer (reserve a block of hours each month).

Typical structure:

• €50-150/hour depending on region and seniority
• Monthly retainers often range €5,000-15,000/month
• Billed weekly or monthly based on logged hours

Example: “Our blended rate is €75/hour. Based on your scope, we estimate 400-500 hours. We’ll bill monthly for actual hours worked.”

The Real Cost Comparison

Let’s make this concrete. Here’s what a typical mid-complexity MVP (user auth, dashboard, 5-7 core features, payment integration) actually costs under each model:

Key Insight

Fixed-price includes a “risk premium” agencies pad estimates by 15-25% because they’re absorbing the risk of scope changes. With hourly, you’re essentially paying wholesale but taking on the risk yourself.

When Fixed-Price Saves You Money

Fixed-price is your friend when:

1. You have a clear, stable scope

If you’ve done proper discovery—user research, feature prioritization, wireframes—and you’re confident in what you’re building, fixed-price protects you from paying for agency inefficiencies.

2. You need budget certainty for investors

Pre-seed founders often need to show investors exactly how their runway will be spent. “MVP development: €35,000” is a lot cleaner than “MVP development: €30,000-45,000 depending on how it goes.”

3. You’re working with a new agency

Don’t know if they’re efficient? Fixed-price means their learning curve is their problem, not yours. If they underestimated the work, they eat the cost.

4. The project has natural boundaries

MVP launches, website redesigns, and branding projects have clear start and end points. These are ideal for fixed-price.

Real Example

A PropTech founder came to us with detailed wireframes and a prioritized feature list. We quoted €42,000 fixed. The project took 11 weeks and probably 480 hours internally. At €75/hour, that would have been €36,000—but we also had two weeks of back-and-forth on a complex map integration that would have added another 40+ billable hours. Fixed-price saved them money because scope was clear and we absorbed the technical challenges.

When Hourly/Retainer Saves You Money

Hourly or retainer wins when:

1. You expect the scope to evolve

Building something innovative? Not sure exactly what features you need until you test with users? Hourly lets you pivot without painful change order negotiations.

2. You need ongoing work after launch

Post-MVP, you’ll need bug fixes, iterations based on user feedback, new features. A retainer gives you dedicated capacity without scoping every small task.

3. You trust the agency and their efficiency

If you’ve worked with a team before and know they’re fast and honest, hourly means you’re not paying the “risk premium” baked into fixed-price quotes.

4. You want maximum control

Hourly gives you visibility into exactly where time is going. You can redirect priorities week-to-week. With fixed-price, you’re locked into the original plan.

Real Example

A HealthTech founder started with us on a €28,000 fixed-price MVP. After launch, user feedback showed they needed to completely rethink the onboarding flow and add a feature we hadn’t planned. They switched to a €8,000/month retainer. Over 6 months, they iterated fast, tested constantly, and spent €48,000 total on post-launch work. Fixed-price change orders for all those pivots would have been €60,000+ and taken twice as long to negotiate.

The Hidden Costs Nobody Talks About

Hidden costs of fixed-price:

• Change order friction: Every “small tweak” requires a mini-negotiation. This creates tension and slows decisions.
• Rushed discovery: Agencies need to lock scope early. If you haven’t figured everything out yet, you’ll pay for it later.
• Quality shortcuts: If an agency underestimated the work, they might cut corners to protect their margin. You won’t always notice until later.
• Overpaying for simplicity: If the project turns out easier than expected, the agency keeps the difference. You paid for risk that didn’t materialize.

Hidden costs of hourly/retainer:

• Scope creep: Without a fixed endpoint, projects can drift. “One more feature” keeps getting added.
• Budget anxiety: Watching hours tick up is stressful. Some founders second-guess every decision, which slows everything down.
• Unused retainer hours: If you book a €10,000/month retainer but only use €7,000 worth of work, those hours often don’t roll over.
• Management overhead: You need to be more involved in prioritization and approval. Your time has value too.

The Decision Framework

Answer these five questions to find your best fit:

Scoring: 3+ “Fixed” answers = go fixed-price. 3+ “Hourly” answers = go hourly/retainer. Mixed = consider a hybrid approach.

 

The Hybrid Approach (What We Recommend)

For most founders building their first MVP, we recommend:

Phase 1: Fixed-price MVP (8-12 weeks)

Lock in your core MVP with a fixed price. This gives you budget certainty, a clear deadline, and something to show investors. Typical range: €15,000-50,000 depending on complexity.

Phase 2: Retainer for iteration (ongoing)

Once launched, switch to a monthly retainer. This lets you respond to user feedback, iterate fast, and add features based on real data—not assumptions. Typical range: €5,000-15,000/month.

This hybrid gives you the best of both worlds: predictability when you need it, flexibility when you need it.

Red Flags to Watch For

With fixed-price quotes:

• No discovery phase included (they’re guessing)
• Vague deliverables (“we’ll build your app” vs. specific features listed)
• No process for handling changes (it will happen)
• Price way below market (they’ll cut corners or hit you with change orders)

With hourly/retainer quotes:

• No estimate range provided (they should have some idea)
• Vague about what a “typical” project costs
• No cap or budget alerts offered
• Unused retainer hours don’t roll over at all

The Bottom Line

Neither model is inherently better. The right choice depends on your situation:

• Clear scope + need certainty = Fixed-price
• Evolving requirements + need flexibility = Hourly/Retainer
• Building MVP then iterating = Hybrid (fixed then retainer)

The founders who save the most money aren’t the ones who pick the “cheapest” model—they’re the ones who pick the model that matches how they work and what they’re building.

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Not Sure Which Model Fits Your Project?

Book a free 30-minute strategy call. We’ll review your project scope, discuss your budget constraints, and recommend the pricing model that makes the most sense for your situation – whether you work with us or not.

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