Definition
What is time and materials (T&M)?
Time and materials (T&M) is a billing model where a client pays for the actual hours worked at agreed rates, plus the cost of any materials or expenses used. Unlike a fixed price, the final cost depends on how much work the project takes. It suits engagements where the scope is uncertain or expected to change as the work unfolds.
How time and materials billing works
Under a T&M arrangement, the provider tracks the hours spent on the work and charges them at pre-agreed rates, which may vary by role or seniority. Any materials, third-party costs, or expenses are billed on top. Because the client pays for what is actually done, accurate time tracking is central to billing correctly.
Time and materials versus fixed price
A fixed-price contract sets one total for a defined scope, so the provider carries the risk if the work takes longer than expected, and the client has cost certainty. Time and materials flips that: the client carries more of the risk of a larger effort, but gains flexibility to change direction without renegotiating a price.
- Fixed price: predictable total, best when scope is clear and stable
- Time and materials: pay for actual effort, best when scope is uncertain or evolving
When to use time and materials
T&M fits work where the full scope cannot be pinned down up front: exploratory or research-heavy projects, ongoing development, and engagements where the client expects to steer the work as it progresses. Clear rate cards and, often, a not-to-exceed cap help keep costs transparent so the open-ended nature does not surprise the client.
How this works in Belvak
Belvak lets team members log hours against projects, so the effort behind time-and-materials work is captured and can be weighed against what is invoiced. Combined with per-project invoicing, that gives you the record needed to bill for actual time and see the labor cost of each engagement.
FAQ
Frequently asked questions
What is the difference between time and materials and fixed price?
Fixed price sets one total for a defined scope, giving the client cost certainty while the provider carries the overrun risk. Time and materials bills actual hours and costs, so the client pays for real effort and gains flexibility to change direction.
When should you use time and materials billing?
Use it when scope is uncertain or expected to change, such as exploratory projects, ongoing development, or work the client wants to steer as it progresses. A not-to-exceed cap can keep the open-ended cost transparent.
How is time and materials billed?
The client pays for the hours actually worked at agreed rates, plus any materials or expenses used. Accurate time tracking is essential, because billing is based on the real effort recorded.