Hourly vs Subscription Software Development: Real Costs

Hourly billing charges for time, so the price grows with every change. A fixed bid sets one price for a fixed scope, so every change becomes a change order. A subscription charges a flat monthly fee for ongoing work. For a small business with a steady list of things to build and fix, a subscription is the easiest to budget.

The three ways to pay for software work

	Hourly	Fixed bid	Subscription
You pay for	Time spent	A defined scope	Ongoing work, monthly
Price certainty	Low	High, until scope changes	High
When plans change	More hours	A change order	Reprioritize the list
After launch	Upkeep billed by the hour	Often a separate contract	Usually included
Best for	Small, one-off fixes	Clear projects that will not change	A steady list of work

None of these is right for everyone. Here is how each one plays out for a business with 10 to 200 staff.

Hourly: freelancers and agencies

You pay for each hour a developer works, usually billed monthly.

Where it works: a small fix, a one-time report, a few hours of help with an existing tool. You pay for exactly what you use.

Where it hurts:

• The total is open-ended. An estimate is a guess, and the risk of being wrong sits with you.
• Slow work pays more. Nobody means it that way, but under hourly billing a faster developer earns less for the same job.
• Talking costs money. Calls, emails, and estimates can be billable too, so people hesitate to ask questions.
• Upkeep never ends. After launch, every fix and update is more hours.

What about rates? Rates vary so much by person, city, and skill that any average would mislead you. For context, Job Bank lists the median wage for a software developer employed in Canada at $48.08 an hour (Job Bank). That is an employee's wage. A freelancer or agency rate also has to cover their own overhead, benefits, and time between clients. Ask for the rate in writing, and ask for a monthly cap.

Fixed bid: one price for one project

You describe what you want, the developer quotes a price, and they build it.

Where it works: a clear project where you know exactly what you need and it will not change. A government or corporate buyer who must run a formal tender often needs this model.

Where it hurts:

• Weeks of scoping before anything is built. The quote is only as good as the spec, so the spec takes time.
• Risk padding. The developer carries the risk of being wrong, so a sensible one prices that risk into the quote.
• Change orders. You will learn things once you see the software. Every change after signing is a new negotiation.
• It ends at handover. Hosting, fixes, and the next feature are a separate conversation.

Subscription: a flat monthly fee for ongoing work

You pay the same amount each month. You keep a list of requests. The developer works through it, shipping regularly, and keeps everything running.

Here is how ours works, since it is the one we know best:

• Core, $3,500 CAD a month. One request in progress at a time.
• Scale, $6,000 CAD a month. Two requests in progress at a time, priority in the queue, and a monthly roadmap session. Larger builds like portals and internal apps fit best here.
• Something ships every week. Working software, not status reports.
• Hosting and upkeep included for everything we build.
• Pause or cancel anytime. No long contracts.
• You own everything: code, workflows, accounts, and data, from day one.
• Outside costs at cost. AI usage, text messages, and paid software seats are billed at cost, with no markup.

Why this model now? AI has made building software faster. Hourly billing hides that gain, because faster work means fewer billable hours. A subscription passes the speed to you: more gets built for the same monthly price. Full details are on our pricing page.

What a small business actually pays

Compare the subscription to an hourly quote

To compare fairly, divide the monthly price by the hourly rate you have been quoted. The table below is arithmetic, not market data. Use your own rate.

Your quoted hourly rate	Hours that equal Core ($3,500)	Hours that equal Scale ($6,000)
$75	47 hours	80 hours
$100	35 hours	60 hours
$150	23 hours	40 hours
$200	18 hours	30 hours

Then ask two questions. Would you use that many hours a month, every month? And would those hours include hosting, upkeep, and fixes, or are those extra? If you would use far fewer hours, hourly is cheaper. If you would use about that many or more, the subscription is likely the better deal.

Compare the subscription to hiring

A developer employed at the Job Bank median of $48.08 an hour, full time at 2,080 hours a year, costs about $100,000 a year in wages, before CPP, EI, benefits, equipment, and software. Core is $42,000 a year. Scale is $72,000.

Hiring can still be the right call. If you need someone on site every day, have enough work to keep them busy all year, and can manage and review a developer's work, an employee may be the better fit. If you do not, a subscription gets you senior work without the hiring and managing.

Compare the return, not just the price

Price is half the picture. The other half is what the work saves. Our automation ROI calculator turns the hours your team spends on manual tasks into a yearly cost and shows the payback against each plan. We walk through the math in how to calculate AI automation ROI.

When a subscription is the wrong fit

We will say this plainly, because it saves everyone time. A subscription is not the right choice if:

• You have one small job and no list after it. Hire a freelancer by the hour.
• You want the lowest possible hourly rate. A subscription is priced on value and speed, not on the cheapest hour.
• You must run a fixed-bid tender. Some buyers are required to. A subscription does not fit that process.
• You need IT support. Help desks, laptops, and networks are a different service. We do not offer it to new clients.
• You need a full-time developer on site. Hire one.

If none of those apply and you have a steady list of automations, fixes, and features, a subscription is usually the simplest and most predictable way to get them done.

Questions to ask any developer before you sign

Whatever model you choose, get clear answers to these:

1. Who owns the code, the accounts, and the data? You should, from day one.
2. What does upkeep cost after launch? Hosting, updates, security fixes.
3. How are changes priced? Hours, change orders, or included?
4. How often will I see working software? Weekly beats a big reveal in three months.
5. Can I pause or cancel, and what notice is needed?
6. Are outside costs, like hosting or AI usage, marked up?
7. If you disappeared tomorrow, could another developer take over? Proven, common tools make that possible.

That last one matters. Our largest client platform, the freight platform, was built by another developer. We took on its modernization, integrations, and AI work, and we credit the original author. Common, well-known tools made that easier. We build the same way, with proven, widely used tools, so any good developer can work on your software later. See what we build under custom software.

Common questions

Is a retainer the same as a subscription?

Not quite. A retainer usually prepays a block of hours, and unused hours may or may not roll over. A subscription is a flat fee for ongoing work, measured by what ships, not by hours. The difference shows up when work goes faster than expected: under a retainer you have leftover hours, under a subscription you get more done.

How much does custom software cost for a small business?

It depends on how you pay for it. Hourly and fixed-bid work is priced per project, so ask for the full cost including hosting and upkeep. On our plans, custom software is built under a flat monthly price: Core at $3,500 or Scale at $6,000 CAD. You can pause when the work is done.

What happens to my software if I cancel?

With us, you keep everything we built. We hand over the code and accounts, with notes on how it all works. You can resume anytime and we pick up where we left off.

Can I try it before committing long term?

There is no long contract to commit to. Start with a free 30-minute Automation Map call, subscribe for a month, and see what ships. If it is not working, cancel.

If you are weighing your options, book a free 30-minute Automation Map call. We will look at your list and tell you honestly which model fits it, even if it is not ours.