Under time and materials, the client pays for the hours your team actually works, at rates agreed per person or per role, plus direct costs. It's the default model for evolving scope — product development, staff augmentation, long-running maintenance — where fixing the scope up front would be fiction.
The trade against fixed price is risk allocation: fixed price puts estimation risk on the vendor (you eat overruns, you keep efficiency gains); T&M puts scope risk on the client (they pay for what it actually takes). Retainers sit in between — a fixed monthly amount for an agreed capacity.
T&M lives or dies on the paper trail:
- Timesheets are the invoice's source of truth. Every billed hour needs a logged hour behind it; gaps become awkward client conversations.
- Approval before billing. A manager reviews and locks hours before they hit an invoice, not after the client disputes them.
- Rate discipline. Per-person or per-role rates, agreed in writing, applied consistently — spreadsheet rate drift is real money.
See the full guide: From timesheets to client invoices.
In Helia, approved timesheet hours generate client invoices directly — rates per assignment, VAT handled, PDF and email included — so the T&M paper trail is a byproduct of working, not a month-end project.