What is the difference between fixed-price billing and hourly billing in project invoicing?

Project Operations supports both fixed-price and time-based billing—often referred to as time and materials. The difference is not just about invoicing, but about who bears the risk when something takes longer than planned.

Time and materials

The customer pays for the time and materials used. The customer bears the risk, and your job is to document the work performed. Time tracking then forms the basis for invoicing, and its accuracy determines both revenue and trust. Careless time tracking leads to disputed invoices.

Fixed price

The customer pays an agreed amount regardless of how long it takes. You bear the risk. The time records are not sent to the customer, but this makes them all the more important internally — they are the only way to determine whether the project is actually profitable. A common mistake is to become less diligent about tracking time on fixed-price projects precisely because the customer does not see the records.

In practice, it is often a combination of both

Many projects have a fixed price for the main scope and bill additional work by the hour. Project Operations supports this combination, but the project contract must be set up with the correct lines from the outset. It is worth taking the time to do this before the project begins—correcting it afterwards is both cumbersome and a potential source of accounting errors.