What is time and materials?
Time and materials (T&M) is pay-as-you-go. The agency and the client agree hourly or day rates for the people involved and a basis for passing through costs (at cost, or with a handling fee), usually with an estimate or a cap so the client knows the likely range. Then the work is done, the hours are logged, the costs are collected, and the invoice at the end of each period shows exactly what was spent. It is the opposite of a fixed fee, where the price is set before the work and the agency carries the risk of taking longer.
It suits work that cannot be scoped precisely in advance: an evolving edit, a program of small requests, a project where the client is still deciding what it wants. It suits defined deliverables much less well, because the client is paying for the agency's efficiency rather than for a result.
Why it matters
Why time and materials billing matters
T&M moves the risk to the client. On a fixed fee, a job that runs long is the agency's problem; on T&M it is the client's bill. That is fair when the scope genuinely cannot be fixed, and it is why T&M exists: it lets work start before everything is known, and it lets the scope change without a change order every time. The cost is predictability. Clients on T&M watch the meter, ration conversations with the people they hired for judgment, and sometimes get a smaller, more cautious piece of work than a fixed fee would have produced. For the agency, T&M is safe but it rewards hours rather than results, which is not where creative work is best.
In practice
How time and materials works in practice
- 01
The agreement sets the rates by role, the cost basis for expenses, an estimate of the likely total, a cap or a point at which the agency must seek approval before continuing, and the billing period. Every hour is logged with a note on what was done; every expense is captured with a receipt. At the end of each period the producer reviews the log, writes off anything that should not be charged, and the invoice goes out with the timesheet and the expense list attached.
- 02
Throughout, the producer tracks the running total against the estimate and tells the client before it is exceeded. When the scope settles into something definable, many engagements convert to a fixed fee for the remaining work, which gives the client the predictability and the agency the reward for efficiency.
At RIOT
Time and materials at RIOT
We do not sell hours. A project starts with its scope, and the plan and number we send within a couple of business days price the work as a whole, so a longer day in the edit does not become a bigger invoice. We track time internally to keep our estimates honest, and when a scope changes we say so and re-plan it, rather than letting the meter run.
Watch out
What people get wrong about time and materials
Using it for work that could have been scoped. A launch film billed by the hour is a fixed fee with the risk moved to the client and the reward for efficiency removed from the agency. The second mistake is running T&M without an estimate or a cap, which produces the invoice that ends relationships. The third is skipping the review before invoicing: a raw timesheet sent as a bill is a list of everything the agency did, including the things it should have absorbed.
