How is the project finalized and billed in iterative development?

Question

Project management

Good afternoon. The question is addressed to those who use in practice one of the iterative approaches in development. Let's say a client comes to you without a clear and final TOR. At the end of each development iteration, he adds/changes requirements, but of course he wants to know the project budget in advance. How do you get out? Do you overestimate the entire project? Are you billing for each individual iteration?

Answer 1

We study the project with a small team (for a fee), as a result we give the client a detailed assessment. Billing is iterative, every sprint. We charge not for code, but for man-hours. In fact, we work for T&M. It is also possible to work on a fixed price iteratively, but you need to understand the product well and take into account the risks. And reevaluate all changes and change the budget.

Answer 2

Changes for extra money

Answer 3

This is a matter of personal choice and preferences of the client, someone names the amount in advance with a margin, taking on the risks of evaluation, someone breaks it into iterations and names the cost in parts.
But it is important to understand that the client almost always comes without a clear TOR, in which case it must be written. How are you going to develop without knowing what exactly you need to implement? Always strive to identify the client's requirements in as much detail as possible before development begins, so that in the future the costs associated with changing requirements do not fall on your shoulders. If the client does not know what he wants, it is better to offer him options than to expect him to understand in the process.