Belitsoft Introduces 2026 Guide on How to Select the Best Pricing Model by IT Project Type

The Belitsoft software development outsourcing company has looked into the most common ways to set prices. The decision has a direct effect on the project's risk, flexibility, and potential return on investment for both new and old businesses.

The area of software development that is outsourced is changing rapidly. Smaller IT expenditures, the emergence of generative AI, and new methods of talent acquisition are all challenges facing businesses. As a result of these developments, purchasing managers and technology executives are changing how they work with outsourcing partners. They are moving away from contracts that only focus on lowering costs. Instead, they are drafting contracts that link a vendor's benefits to real business outcomes. An outcome-based or value-driven partnership is the term used to describe this strategy.

For example, according to a Deloitte poll, 80% of businesses intend to maintain or grow their outsourcing expenditures, placing a greater emphasis on these outcome-based agreements. Separately, Business Insider reports that businesses are being forced to experiment with alternative payment mechanisms due to the high cost and rapid evolution of generative AI projects. These include subscription or pay-for-use schemes, and go beyond simply paying for time and content.

Surveys & Industry Trends

Several recent surveys and papers provide insight into the current state of pricing models:

• Software Spend Growth: According to tech industry evaluations, software budgets are rising to support digital activities (West Monroe/TechCrunch, Gartner). According to a TechCrunch survey, 91% of IT executives want to increase their IT expenses in 2025, while 86% of them did so a year ago. However, those same leaders are worried about ROI; for example, MIT says that 95% of AI pilots do not make money. This puts pressure on spending to be linked to results or efficiency.
• Budget Pressures: Many businesses are keeping a close eye on development expenses due to the economy's volatility. Deloitte reports that 83% of businesses use AI for outsourcing, and many are finding a balance between insourcing and outsourcing. Nevertheless, 80% want to keep or increase their spending on third-party outsourcing, even focusing more on front-office and core operations, such as sales and R&D. In summary, outsourcing remains quite popular, but contracts are becoming more like partnerships.
• Project Risk: Research indicates that approximately 50% of major IT projects exceed their budget. This shows the dangers of large-scale development. Some of that risk can be reduced by using suitable pricing models (as well as robust governance). According to the Project Management Institute (PMI), inadequate requirements account for 37% of project failures, further demonstrating how detrimental ambiguity is to all models, including fixed-price ones.
• Offshore vs. Onshore: According to Wired, American tech companies and startups are actively nearshoring or offshoring in order to access talent and keep costs down. This means having more vendor options and competitive prices. However, as early as 2017, VentureBeat observed that as offshore labor costs increased, nearshore U.S. locations were gaining ground. In the end, procurement teams have more negotiation leverage to obtain advantageous conditions. While nearshoring typically supports time-based models (shared timezone, culture), highly offshore agreements often favor fixed rates due to mistrust.
• More and more outcome-based deals: A recent KPMG Global Outsourcing Survey found that 68% of new outsourcing contracts, specifically in call centers, now include outcome-based components. This is up from only 23% five years ago. Although this pattern is mostly seen in contact centers, it indicates a trend toward shared-risk pricing in service contracts. The desire of clients to pay for results is driving an increase in value-based engagements in IT outsourcing, according to Gartner and others.

Choosing the Right Model for Every Kind of Project

In reality, the pricing model should be consistent with the aspects of the project and the company's goals. Here are some guidelines:

• Minimum viable products (MVPs) and small projects typically have a reasonably clear scope (only the required features) and low finances. The ideal option is frequently a fixed-price or modest fixed-capacity (story-point) engagement. It lowers risk and offers precise goals. According to Entrepreneur.com, fixed bids can work well for MVPs, but keep in mind that further modifications will be costly. Instead, if they believe they will need to make adjustments beyond the initial development, some businesses may engage a small specialized team for a brief period of time.
• Geographical Considerations: Because wages are higher in areas like the United States and Europe, clients frequently look for greater value (outcome focus) rather than merely cost-cutting. Concerns about quality and regulations have led to an increase in nearshoring to U.S. or European hubs. According to Wired, international jobs are increasingly being filled by offshore teams in Latin America and Eastern Europe. For instance, in order to meet strict fiscal and regulatory criteria, European procurement professionals can prefer multi-year outcome-based contracts. U.S. corporations are integrating offshore and domestic resources due to a shortage of talent; they may favor flexible models (such as time and material or dedicated teams) that allow them to swiftly access global expertise.
• Long-Term Platforms & Product Development: Requirements may inevitably change when constructing a major application, such as a feature-rich mobile app or online platform. Time & Materials or dedicated team models excel in this situation. They enable the project to change course and grow as necessary. You should have a committed staff if you want to maintain control and continue working. When adaptability takes precedence over control, T&M can maintain costs in proportion to output. Another option is story-point (fixed-capacity) contracts, in which you reprioritize work and purchase capacity on a monthly basis. In agile outsourcing, this is growing in popularity. Incorporate performance evaluations and potential rewards to sustain quality in all long-term situations, such as bonuses for meeting deadlines early or under budget.
• Maintenance and Support: After a product is released into the market, it must constantly be updated, repaired, and assisted. Time and Material (T&M) or a monthly retainer is frequently employed. Some companies offer Service Level Agreements (SLAs) that guarantee response times and round-the-clock support in exchange for a fixed monthly charge. It makes sense to have a retainer, such as a small team of people who are always willing to assist, if the work is consistent and predictable. If needs are very different, a pay-for-actual-hours (T&M) plan with an optional monthly cap may be used. Another option is the dedicated-team approach, which involves maintaining a small, long-term product ownership team that is outsourced. One advantage is that team members will stick with your product and retain a lot of the knowledge they have gained.
• Experimental/Innovation Projects: Consider risk-sharing methods if the project involves a lot of R&D and has no assurance of a successful outcome, such as AI research or proof of concept. Pay a base T&M rate, for instance, but provide a success incentive upon reaching specific innovative milestones. One option is a short-term contract that cannot be changed, but if it works out, you can switch to a long-term model. The rise of subscription/use pricing for advanced AI services is one example; if the effort is connected to a consumption statistic, this might also apply to development, albeit these examples are still in their early stages.

All things considered, existing patterns point to a move towards more adaptable, value-based frameworks. According to Business Insider, the high costs of AI are making businesses switch to different pricing models, like token-based subscriptions. Vendors are willing to share risk and accept accountability for the result. According to Deloitte, value-based relationships are becoming more prevalent. Smart CIOs and founders will likely choose models that combine cost control and flexibility. For example, they might use fixed prices for certain stages or combine a T&M core with result incentives. For everyone to know what to expect and what their goals are, no matter which model is chosen, communication and openness are very important.