time and materials
A pricing model in which the client pays for actual hours worked plus the cost of materials or third-party expenses.
Definition
Time and materials, often abbreviated T&M, charges for what is actually used. The agency bills hourly or daily rates for staff time and passes through costs such as stock photography or printing, often with an agreed markup. It suits projects whose scope is uncertain or evolving. The drawback for the client is budget uncertainty, so it works best with estimates, caps and regular reporting. For the agency, it reduces the risk of underpricing. Pair it with a not-to-exceed figure and a monthly reporting routine so flexibility does not drift into an open-ended bill.
In a sentence
The project ran on time and materials because the scope was still being explored.
They asked for a monthly cap on the time and materials budget.
