My agency prefers to work on time and materials rather than fixed bid contracts, though we have also tried some fixed bid projects. They both have pros and con

My agency prefers to work on time and materials rather than fixed bid contracts, though we have also tried some fixed bid projects. They both have pros and cons. The advantage of time and materials is you always get paid in full for your exact time used; on a fixed bid if something ends up being unexpectedly difficult, we have to eat some unpaid hours to make up for it. Therefore on a fixed bid clients actually almost alway end up paying significantly more in total, since we have to pad our estimate with a higher cost and have a decent buffer or "insurance" that we will be able to complete it within our estimated timeline. When paying for the exact time and materials you get exactly what you paid for in equivalent work hours and their output. It's a more flexible arrangement where if the client has new or evolving requirements we can pick them up without having to re-negotiate the whole contract. I remember at least one fixed bid contract where we ended up working nearly six weeks extra and the agency had to eat that cost so we made nothing in profit, but at least fulfilled the contract. I try to pad my estimates appropriately either way so we are usually on the under side of our quoted estimate for a given project with some wiggle room. Clients always appreciate when the work ends up being a bit cheaper than the quoted estimate. On the other hand, if we don't complete something the client does end up having to pay more (or source elsewhere, but almost always they prefer to keep us on if we've been doing good work for them).