Fixed-price projects are attractive to clients and risky for the firm doing the work. Two things decide whether they make money: whether the scope stays fixed, and whether milestones are billed the moment they're met.
Write milestones the client can sign off
Good milestones are concrete:
- "Requirements document signed off", not "Requirements phase".
- "Beta released to the client's test team", not "Development 60% done".
- "User acceptance testing signed off and system live".
Each milestone needs a clear acceptance step and a share of the fee.
Bill the day a milestone is met
The most common cash flow mistake in software firms is waiting until month-end, or until "everything is wrapped up", to invoice a milestone. Bill it the day it's accepted.
Keep scope under control
- Freeze requirements at sign-off, with a change request process after that.
- Price every change before building it.
- Track hours against the estimate by phase, weekly.
Make UAT a defined stage
User acceptance testing drags on when there's no end date. Agree its length, what counts as a defect versus a change, and who signs off.
Plan for maintenance
After go-live, support needs a contract: an annual maintenance agreement or a support retainer. Without one, "small fixes" become free work.
How MSMEPulse helps
MSMEPulse includes software development, mobile app and ERP implementation templates with milestones for requirements sign-off, build, UAT and go-live, and sign-off documents on the client checklist. Track hours against the budget by phase, and turn each accepted milestone into an invoice in a click.
