'Say you estimate the cost at $10,000 and they want you to make a change, you say, "Okay, but this change wasn't included in the $10,000 so we will have to estimate how much the change will cost and add it to the bill. If you want us to do that, let us know."'
Sometimes it's really that simple. Other times, you end up debating whether something is a 'change', or 'clarification', or some replacement, or whatever.
The upside of fixed bid is that you can do quite well when the process is well-defined and everyone is reasonable. The upside of hourly is that you get to offload assorted issues (i.e. prolonged requirements gathering, change requests, and ad-hoc requirements finessing) and focus on the work.
For every person I hear advocate fixed-bid, I hear another advocation hourly, and each swears experience is on their side.
Sometimes it's really that simple. Other times, you end up debating whether something is a 'change', or 'clarification', or some replacement, or whatever.
The upside of fixed bid is that you can do quite well when the process is well-defined and everyone is reasonable. The upside of hourly is that you get to offload assorted issues (i.e. prolonged requirements gathering, change requests, and ad-hoc requirements finessing) and focus on the work.
For every person I hear advocate fixed-bid, I hear another advocation hourly, and each swears experience is on their side.