Time and materials (T&M)
also known as T&M · time and materials billing
A pricing model where the client pays for the actual hours worked plus any expenses, rather than a fixed price. Flexible, but it puts overrun risk on the client.
For example, an agency bills a discovery project at $150/hour plus software costs, invoicing monthly for whatever was worked. If the work expands, the client simply pays for the extra hours - there is no fixed cap unless one is agreed.
Why it matters to agencies: time and materials protects the agency on open-ended or evolving work, where a fixed price would force you to pad the quote or eat the overrun. The trade-off is that clients prefer cost certainty, so it works best with trusted clients or a capped estimate.
- No estimate or cap, so clients fear an open-ended meter.
- Not reporting hours transparently and often.
- Under-tracking time, so you quietly under-bill yourself.
What is time and materials (T&M)?
A pricing model where the client pays for the actual hours worked plus any expenses, rather than a fixed price. Flexible, but it puts overrun risk on the client.
What is the difference between time and materials and fixed-fee pricing?
T&M bills for actual hours worked, so cost can vary; fixed-fee sets one price up front, putting overrun risk on the agency.
When should an agency use time and materials?
For open-ended, exploratory or fast-changing work where the scope is hard to pin down enough to price a fixed fee fairly.
How do you protect a client on a T&M project?
Agree an estimate or a not-to-exceed cap, report hours regularly, and raise it early if the work is trending over.