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.
What It Is
Time & Materials (T&M) is a flexible engagement model where you pay agencies based on the actual time spent and expenses incurred. Rather than agreeing on a fixed price upfront, you're billed for hourly rates multiplied by hours worked, plus any direct costs like software licenses, stock assets, or third-party tools.
Why It Matters for Startups
For early-stage teams with evolving requirements, T&M removes the risk of locking into a scope that might change. You avoid paying for overestimated work or getting stuck with underestimated budgets. This model works well when you're exploring new directions, iterating rapidly, or when project requirements aren't fully defined at the start.
What to Look For
When hiring an agency on T&M terms, establish clear rate cards upfront, define which roles bill at what rates, and agree on communication cadence to track hours transparently. Set a realistic budget ceiling to prevent surprises, request weekly or bi-weekly invoices with detailed breakdowns, and ensure the agency uses time-tracking tools. Ask how they handle admin overhead and whether rates vary by seniority level.
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