Statement of Work
A written agreement between a client and service provider that outlines the scope, deliverables, timeline, and cost of a specific project or engagement.
What It Is
A Statement of Work (SOW) is a formal document that defines exactly what an agency will deliver, when they'll deliver it, and what you'll pay. It includes specific tasks, milestones, deliverables, timelines, and responsibilities for both parties. Think of it as the contract's practical counterpart—while a contract covers legal terms, a SOW covers the actual work.
Why It Matters
For startups and product teams, a clear SOW prevents misalignment and scope creep. It protects both you and the agency by setting explicit expectations upfront. Without one, "we'll improve your website" can mean anything from minor tweaks to a complete redesign. A good SOW keeps projects on track and budgets intact.
What to Look For
When hiring an agency, ensure the SOW includes detailed deliverables (not vague descriptions), specific deadlines with milestones, revision limits, payment terms, and how changes are handled. Ask whether dependencies or third-party approvals are accounted for. A quality SOW shows the agency understands your project and takes accountability seriously.
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Hourly Rate
A pricing model where agencies charge a fixed rate per hour of work, regardless of project scope or deliverables. It's transparent but unpredictable for budget planning.
Retainer
A fixed monthly fee paid to an agency for ongoing work, rather than project-based pricing. Retainers provide predictable costs and continuous support for design, development, or strategy needs.
Fixed Scope
A project structure where the scope, deliverables, timeline, and budget are clearly defined upfront with minimal changes allowed. You know exactly what you're paying for before work begins.
Time & Materials
A billing model where clients pay for actual hours worked and materials used, rather than a fixed project fee. Costs scale with project scope and duration.