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Let’s look at a very familiar scenario.
Prospects go through the agency sales process. They are then qualified by the team and land in the laps of you, the project manger. To your surprise, a large amount of work has been completed. Let’s say that the SOW says that a feature-specific MVP will be built within three months.
Because it’s not enough, you grab your chest. Next, you take a deep breathe and begin to work through the project setup processes. You work diligently with the client stakeholders and the internal team to do your best and deliver what was promised. You may need to take deeper breaths as you go.
But, things happen. Priorities can change. Curveballs are thrown. You now have the unique pleasure to manage all kinds of challenges, juggle change orders, and ultimately try to make sure that the client is happy and that the agency remains profitable. You are likely to get it all sorted out since project managers are superheroes disguised as superhumans. However, the narrow scope they were up against doesn’t help.
What if I said there were ways to approach your contracts that would reduce stress and allow the team do their best work?
This article will describe a type of agile contract our product development agency adopted over the past few years, which we called a Duration and price Contract. We have been able to operationally support agile methodologies since adopting this agile contract. It allows us to focus on the project’s value and results, rather than the small details that are often listed in SOWs. We’ll cover:
What are duration and price contracts?
Additional context
Implementation considerations
Get Buy-In for an Agile Agreement
Benefits and drawbacks
Relationship to other types of contracts
My COO shares wisdom words
This article aims to help you understand how to structure agency contracts in a way that drives results and revenue to your bottom line.
What are duration and price contracts?
We came up with the terms Duration and Price Contracts to describe our preferred method of doing business. The project cost is determined based on the time spent by our team members on the project. We’ll get into more details later.
Did you ever read the agile manifesto? The part that said “customer collaboration over contract negotiations”? This is where it all started for us.
Crema is a product design agency based in Kansas City, Missouri. It has a team of distributed employees across the country. Our team had been using agile methods to build products for 6+ years. We wanted an agile contract that would work for us and our clients. An agile contract would also help us to foster a collaborative culture and be more focused on the value we provide to our clients. We felt there had to be a better way of listing specific deliverables and clear features before the product was even launched.
Our team discovered that we needed a pricing structure that would allow us to be flexible and also define what a client is buying. Our clients ultimately buy access to our team members. So why was it necessary to create a pricing structure that allowed us to be flexible while also defining what a client is purchasing. We began to focus on the idea of a dedicated product group, or a set if individual roles that were dedicated to a specific project over a period of time.
We began to experiment with
