You are weighing time & materials against fixed price to outsource your development to Vietnam. You have read the articles that explain the theoretical difference. And you are no closer to a decision, because none of them put the real numbers of an offshore team in Ho Chi Minh City or Hanoi on the table.
I have billed projects under both models from Vietnam. I know the margins, the traps, the cases where time & materials saves a budget and those where fixed price protects a client. What follows is the raw math I rarely share in public.
- 📊 Real price gap: fixed price costs 20 to 30 % more than the equivalent time & materials engagement.
- ⚠️ Hidden risk in time & materials: without tight oversight, the time-zone offset dilutes productivity.
- 💡 Tipping point: under 3 months, fixed price is almost always the safer bet.
- 🎯 The Vietnam equation: a senior developer at €2,500/month all-in reshuffles the deck on both sides.
Time & materials and fixed price: why the textbook definitions no longer cut it
Most content on the topic repeats the same thing. Time & materials means billing for time. Fixed price means billing for an outcome. True on paper, useless in practice when your team sits 9,000 km away.
What is the real difference between time & materials and fixed price in offshore?
With time & materials, you buy working days. Your vendor assigns one or more developers, you manage them, and they bill at a daily rate. Every overrun lands on your invoice. If the scope explodes, the budget follows.
With fixed price, you buy a defined deliverable. The vendor commits to a scope, a deadline, and a set price. They absorb overruns. If a developer needs three extra weeks, their margin takes the hit, not your budget.
As Djilali Feghouli points out in his video on the subject, fixed price commits you to an outcome, while time & materials commits you to a presence. This distinction takes on a special dimension in offshore: a time & materials client must steer a team they never see in person, across a time zone that is +5 hours ahead of Paris.
The video from the Best Of Business Analyst channel adds a point few clients anticipate. Under a fixed-price contract, the vendor systematically builds a risk provision into the quote (turnover, onboarding, penalties). In a Vietnamese context, this provision can represent 15 to 20 % of the real production cost, because the vendor hedges against uncertainties they do not fully control: dong fluctuations, staff rotation, complexity underestimated by a spec written 9,000 km away.
That is the first reason fixed price is mechanically more expensive than time & materials for the same scope.
The real cost: time & materials vs fixed price with a Vietnam team
Let us lay down concrete numbers. A senior developer in Vietnam costs roughly €2,500/month all-in (salary, social charges, workstation, local management). In France, the same profile runs between €7,000 and €10,000/month including overhead and structural costs.
Why does fixed price cost 20 to 30 % more than time & materials?
Because the vendor charges for certainty. Under time & materials, you carry the risk: if the project runs longer, you pay more. Under fixed price, the opposite applies. To absorb that risk transfer, the vendor adds a premium that ranges between 20 and 30 % of the equivalent time & materials rate.
Take a 6-month project with two senior developers in Vietnam.
| Line item | Time & materials | Fixed price | Trend |
|---|---|---|---|
| Dev cost (2 seniors, 6 months) | €30,000 | €30,000 | → same baseline |
| Management / coordination | €4,500 | €6,000 | ↑ +33 % |
| Risk provision | €0 | €6,000 | ↑ fixed price only |
| Vendor margin | €5,500 | €7,000 | ↑ +27 % |
| Total billed to client | €40,000 | €49,000 | ↑ +22 % |
SOURCE: GoLive Software estimates · Updated 06/2026
The same project in France? Expect between €84,000 and €120,000 under time & materials. The gap with Vietnam remains dramatic under both models, but the choice of billing model can represent a €9,000 difference on a mid-sized project. That is not trivial for a startup watching every euro of runway.
According to Statista, the global IT outsourcing market reaches $512 billion in 2026. Vietnam is capturing a growing share of that flow, and the billing model question is becoming central for French SMBs testing offshore for the first time.
Fixed price is not "more expensive" in absolute terms. You are paying insurance against scope creep.
When to choose offshore time & materials (and when to walk away)
Time & materials shines when the scope moves. A SaaS product under construction, a backlog that evolves every sprint, a roadmap driven by user feedback: you need flexibility, not a frozen quote.
What are the real risks of offshore time & materials?
The first risk is remote oversight. Under time & materials, you own the workload. If nobody on the client side attends the daily standups, prioritizes the backlog, or signs off on deliverables, the days tick by without progress. I have seen projects where the client was paying 3 developers on time & materials for 4 months with no active product owner. The result: €30,000 spent, an unusable prototype.
The second risk is the time-zone offset. Paris and Ho Chi Minh City share a 3-hour overlap window between 1 PM and 4 PM (+5 hours ahead). Under time & materials, that window must be used to sync, unblock, and validate. If your project manager is never available during that slot, every question takes 24 hours to get an answer. Multiply by 5 questions per week, and you lose a full week of productivity every month.
Offshore time & materials works if, and only if, you have a technical point of contact on the client side who actively manages the team. That is also what I explain in my article on the advantages of an offshore IT services company: the model holds when middle management is solid.
Conversely, stay away from time & materials if your internal team has neither the bandwidth nor the technical depth to manage remote developers. You will burn budget with zero visibility.
Offshore fixed price: scope it right or overpay
Fixed price protects your budget, but it introduces a different risk: the initial scoping. If your spec is vague, the vendor will inflate the risk provision to cover themselves. You will pay 30 % more instead of 20 %, and the deliverable may not match what you had in mind.
How to scope a fixed-price contract with a Vietnam team
Three non-negotiable conditions for fixed price to work in offshore.
First, a written and validated functional scope before kickoff. Not a 4-slide PowerPoint, but a document that describes every screen, every user flow, every business rule. The more precise the spec, the lower the risk provision, and the closer the fixed price gets to the time & materials cost.
Second, intermediate milestones (every 2 to 4 weeks) with a deliverable demo. Fixed price does not mean "see you in 6 months." Without milestones, you discover gaps too late and the vendor has no incentive to course-correct along the way.
Third, a clear change-order clause to handle scope changes. Because the scope will change, that is inevitable. The question is not "will it move" but "how much does it cost when it moves." A solid fixed-price contract includes a simple mechanism: every out-of-scope request is estimated in additional days at the agreed daily rate, approved by the client before execution.
I detailed the full structure of an offshore project in this article on software development in Vietnam. Scoping the fixed-price engagement is a central part of it.
My verdict after dozens of delivered projects
I work under both models, from Vietnam, for French clients ranging from early-stage startups to industrial groups.
Which model should you choose based on your situation?
Time & materials suits living products. You are building a SaaS, you iterate fast, your backlog changes every week. You have a CTO or tech lead capable of managing the team day to day. You accept that the monthly budget will fluctuate in exchange for flexibility. In that scenario, time & materials in Vietnam gives you access to senior developers at €2,500/month instead of €7,000 to €10,000 in France, with total agility.
Fixed price suits bounded projects. You have a specific need (website redesign, mobile app v1, technical migration), a scope you can freeze, and you want a guaranteed price. You pay 20 to 30 % more, but you sleep well at night.
The trap is choosing fixed price for comfort when your project is exploratory. You end up with a deliverable that matches the original spec but is disconnected from what you learned along the way. And change orders pile up until they exceed the cost of an equivalent time & materials engagement.
The other trap is choosing time & materials for the apparent savings when you have nobody to manage the team. You spend less per day, but far more in total.
My advice: if you are unsure and this is your first offshore project, start with a scoped fixed-price engagement of 2 to 3 months to test the relationship. You validate technical quality, communication, and deadline adherence. Then, if the project extends, switch to time & materials with a team you already know. That is exactly the path most of my clients follow at GoLive Software.
"The right model is not time & materials or fixed price. It is the one that matches your real ability to manage a remote team."
Vincent Roye, June 2026
What I also observe is that AI is changing the equation on both sides. A senior Vietnamese developer equipped with Claude Code or Cursor now delivers in 3 weeks what took 5 weeks two years ago. Under time & materials, the client pays for fewer days. Under fixed price, the vendor earns a better margin and can offer more competitive pricing. Vietnam is gaining attractiveness because its developers adopt these tools fast.
The real question is never "time & materials or fixed price?" It is: "do I have someone in-house to manage the team, yes or no?" The answer dictates the model.
Frequently asked questions
Time & materials or fixed price: what is the difference for outsourcing?
Time & materials bills for working time (days or months); the client manages the team and carries the overrun risk. Fixed price bills for a defined deliverable at a set price; the vendor carries the risk. In offshore, this distinction directly impacts daily communication and time-zone management.
Is fixed price more expensive than time & materials?
Yes, on average 20 to 30 % more expensive for the same scope. This premium covers the risk provision, the more rigorous functional scoping, and the transfer of responsibility to the vendor. Fixed price is not "expensive" per se: you are paying for a budget guarantee that time & materials does not offer.
What are the risks of offshore time & materials with Vietnam?
The two main risks are insufficient oversight on the client side (no active product owner, no prioritization) and poor use of the 1 PM to 4 PM sync window (Paris time). Without discipline on both points, offshore time & materials wastes budget without producing tangible value.
How do you bill an offshore project in Vietnam?
Two options: a daily rate under time & materials, typically between €150 and €250 for a senior profile, or a global fixed price calculated from the daily rate plus a 20 to 30 % markup. Payments are made in euros by bank transfer, with monthly milestones under time & materials or delivery-stage payments under fixed price.
Time & materials or fixed price for an IT services firm subcontracting to Vietnam?
A French IT services company subcontracting to Vietnam most often uses time & materials internally (paying its subcontractors monthly) and resells to its end client at a fixed price. The gap between the purchase cost under time & materials and the fixed-price selling price makes up its margin. This model works as long as the IT services firm takes on the technical oversight role that the end client cannot fill themselves.
Vidéos YouTube
- FREELANCE : La Différence entre Régie et Forfait · Djilali Feghouli
- Estimation coût projet IT : forfait vs régie en ESN · Best Of Business Analyst
