Fixed Fee vs Time & Materials: what’s the difference?

Two billing models, two ways of splitting risk between the client and the transition manager.

These are two possible billing models for a transition management assignment. Time & materials (T&M) bills the time actually spent: a daily rate multiplied by the number of days worked. A fixed fee bills a set price, agreed upfront, for a given scope and deliverable: regardless of the time actually required.

Time & Materials: flexibility, at the cost of an uncertain total

With time & materials, the client pays for exactly the time consumed, which suits assignments where the scope can evolve: very common in transition management, where the initial diagnostic sometimes reveals unanticipated issues. The drawback: the total cost is only known at the end.

Fixed Fee: budget certainty, at the cost of rigidity

A fixed fee gives full budget visibility from the moment the contract is signed. In return, it requires a very well-defined scope from the outset: any significant change in scope requires an amendment. It suits short, tightly-scoped assignments (an audit, setting up a specific process) better than a multi-month general management assignment.

What MT-Transition practices

The vast majority of industrial transition management assignments are billed on a time & materials basis, because they cover a leadership function whose exact scope becomes clearer over the first few weeks. A fixed fee remains available for short assignments with a single, clearly-bounded deliverable.

☎ Call: +33 6 59 15 73 54 Describe my need