A fixed-price package or an hourly agency: what you’re actually buying

What is the difference between a fixed price and hourly billing?

The difference is who pays when the work runs long. The US government’s buying rules, the Federal Acquisition Regulation, define both models plainly.

A firm-fixed-price contract has a price that doesn’t move with the seller’s costs, and it “places upon the contractor maximum risk” for them (FAR 16.202-1, effective 13 Mar 2026). A time-and-materials contract pays for hours of work at fixed hourly rates, plus the actual cost of materials (FAR 16.601).

So on a fixed price, if the website takes twice as long, the agency absorbs it. On hourly, you do.

When is hourly billing the better deal?

When nobody can say yet how big the job is. The same rules allow time-and-materials only when it isn’t possible at the start “to estimate accurately the extent or duration of the work” (FAR 16.601). A site you plan to keep reshaping every week fits that description.

You also pay only for work done. If the job goes faster than expected, the saving is yours.

The catch is written into the same rule. Hourly work “provides no positive profit incentive to the contractor for cost control or labor efficiency,” which is why the rule requires the government to keep a close watch on the work (FAR 16.601). You’ll need to do the same: ask for a weekly log of hours, and agree a cap that can’t be passed without your yes.

When is a fixed price the better deal?

When you can describe what you want. The rules call a fixed price suitable for work bought “on the basis of reasonably definite functional or detailed specifications” (FAR 16.202-2). For a business website, that means you can list the pages, the languages and what each page has to do.

You know the cost before you start. The agency has every reason to work efficiently, because overruns come out of its own pocket (FAR 16.202-1).

There are two trade-offs. First, the rules describe a fixed price as the seller’s “assumption of the risks involved” (FAR 16.202-2), and in our view a careful agency prices those risks in. Second, the scope is fixed too, so anything outside it becomes a change request with its own price.

Where do website projects usually go wrong?

In our work, the same three problems turn up whichever way the agency charges.

Scope creep

Small additions pile up: one more page, a booking form, a second language. On hourly, each one quietly adds to the bill. On a fixed price, each one starts a debate about whether it was in the deal. The fix is the same for both: write down what’s included, page by page, before work starts.

Rounds of changes with no end

On hourly, every round of feedback is billed, so a homepage redesigned five times costs five times as much. On a fixed price with unlimited changes, the agency starts to rush rounds or push back on them. A set number of rounds, and a known price for extra ones, gives both sides a clear line.

A handover nobody planned

The site launches, and later you find the domain is registered in the agency’s name or the agency holds the only login. ICANN, the body that coordinates domain names, says it is “not recommended” to list “website designers, hosting providers, or any other third parties” as your domain’s registrant (ICANN blog, Trang Nguyen, 26 Mar 2018).

The same goes for your Google Business Profile. An owner can add or remove users and even delete the profile, and a manager can do neither (Google Business Profile Help, Manage your Business Profile owners & managers). Your business should hold the owner role, with the agency added as a manager.

Ownership of the design and code needs the same care, and the default depends on the country. Under the UAE’s copyright law, unless agreed otherwise in writing, the copyright in a work made for another person belongs to that person, and any transfer of these rights is valid only in writing (UAE Federal Decree-Law No. 38 of 2021, Articles 9 and 28). Under India’s Copyright Act, the author is the first owner, with exceptions such as work made by employees, and a transfer of copyright is valid only in writing and signed (Copyright Act, 1957, sections 17 and 19). Either way, get ownership in writing. This is general information, so ask a lawyer before signing a large contract.

What should you ask any agency before you sign?

Get the answers in writing, in the quote or the contract.

1. What exactly is included? The pages, features and languages, listed.

2. How many rounds of changes, and what counts as one round? One email of notes, or each note on its own?

3. What does work outside the scope cost? A day rate, an hourly rate or a fresh quote, and who decides that something is outside it.

4. Who owns the finished site? Ask for the design, code and written content to be transferred to your business in writing.

5. Whose name is on the accounts? The domain, hosting, Google Business Profile, analytics and any paid tools should belong to your business, with the agency added as a user.

6. What happens after handover? Which logins and files you receive, who fixes a fault found a month later, and what that costs.

Where do Aurora Owl’s packages fit?

We sell websites as fixed packages, so we sit on one side of this choice. Our packages page lists four, Essential, Evidence, Signature and Flagship, each at a flat price. Every package includes two rounds of changes. Changes beyond the two rounds are charged at a day rate, and work after handover is quoted as new work. You send a short brief and get a quote by email that lists what is included.

That suits a business that can describe the site it needs. If you can’t yet say what the site should hold, an hourly arrangement with a cap may suit you better. Whoever you choose, ask the six questions above, and ask them of us too.