Selecting the right pricing structure with vendors can be difficult because the structure should align with your organization’s operating procedures, budgetary goals and what products and services the vendor provides.


In most cases, a pricing or rate agreement you make with a vendor will fall under one of two categories:


1.      Time and materials

2.      Fixed time


It should be noted that you do not have to adopt a universal policy that applies to all vendors. In some instances, you may not have an option. Below, we compare the time-and-materials vs. fixed time pricing structures for your HOA to help you decide which is best for your upcoming project.

What is a Fixed Price Structure?

A fixed-price agreement is a lump-sum, bottom-line contract where a vendor completes a job for a fixed price. A fixed price can be beneficial when job specifications and rates are highly predictable. The vendor should be able to clearly communicate the service that they will perform, all materials and supplies they have to purchase, and a deadline for job completion.


Fixed-price agreements work best when all the parameters of the job are set. They are also ideal if your organization is on a limited budget or the project is small.

What is a Time-and-Materials Structure?

A time-and-materials agreement is subject to variables that can arise during the project. For instance, the vendors may have a general idea of how much labor will be involved, how long the project might take, or the amount and cost of the materials. A general idea leaves the agreement open to some flexibility where the vendor cannot guarantee the price outcomes of all factors involved.


While the time-and-materials pricing structure does provide flexibility, it may work best in long-term or ongoing jobs where the full scope of the project is not yet defined. If you want a little flexibility that allows you to make adjustments in the project as you go while working with a larger budget, then a time-and-materials approach may be right for you.

Key Considerations

When choosing between the two pricing structures, here are some factors to consider:


●        Predictability: How predictable is the outcome? What assurances can the vendor give you?

●        Transparency: Can the vendor guarantee there will not be any surprises or unforeseen problems?

●        Flexibility: How much flexibility do you have with payment, scheduling, and potential sudden changes?

●        Accountability: How much accountability does the vendor need to provide? Do you need to know every detail of the job?

●        Budgeting. Are you on a limited budget, or do you have plenty of funding to work with?

Consulting Your Property Management Company

Your property management company can be your greatest resource and guide for making these types of decisions. In fact, property management companies are often responsible for locating and hiring the best vendors for your HOA. Managers understand how price structures work and which structures are most appropriate for the type of work to be done.

Property Management Services in Minneapolis

Are you looking for a reliable management company to help you with your HOA? Then contact RowCal. We offer comprehensive property management and accounting services for HOAs and property owners in Minneapolis. You can access many of our services through our online tools.


To find out more about the products and services we provide in Minneapolis, MN, call us at 651-233-1307.