How to read a software estimate without getting taken
A short translator for terms that mean different things to engineers and to bills.
Hourly with no cap = open-ended. Fixed fee with vague scope = inevitable change orders. Fixed fee with a written scope and a weekly demo = how grown-ups work.
Software estimates are written in a dialect. The same words mean different things to engineers and to bills. Here's a short translator.
"Hourly with no cap"
Means: open-ended. The project will take what it takes, and you'll see the bill at the end. Sometimes appropriate (true exploration), often a sign that the scope wasn't pinned down. Ask for a not-to-exceed clause if you go this route.
"Fixed fee, scope to be determined"
Means: change orders are inevitable. The fixed fee is for the contract you sign, but everything you didn't think to include will come back as additional work at hourly rates. The fixed feels safe; the change orders are where the actual cost lives.
"Fixed fee with a written scope and weekly demo"
Means: how grown-ups work. The scope is documented, you see progress every week, and if something needs to change, you both agree to the change in writing before any new hours go on the bill. Slightly more friction up front; massively less friction at the end.
What to ask
Ask: what does "done" look like? Ask for a one-pager that lists what's in scope, what's explicitly out of scope, and how changes get handled. If the answer is vague, the bill will be too.
Sources
- [1]PMI: Pulse of the Profession, 2025
Curious where automation could move the needle?
Take our 3-minute assessment. We’ll show you where Custom Softwares fit into your business.
Start assessment