[thelist] What would you do? -- pricing and estimating

[Jim McNulty]

<snip>
Last year, I gave a client a choice between paying us on a time
and materials basis (I'd invoice against timesheets every two
weeks) or fixed price (which was about 20% higher than the
estimate), invoicing against deliverables.
</snip>

Time and materials vs fixed price.  These seem like two good basic
approaches.  Which method do most people use?  Are there other approaches
which people have found successful?  I've found one that doesn't: time and
materials up to a fixed price.  We set a cap at the beginning of the
project.  If we go under, we charge less.  If we go over, we charge the
client the fixed amount, and just eat the extra cost.  We do a lousy job of
estimating, so I'm very interested in other approaches.

--Jim (who is thankfully on a fixed salary)