Many small non-tech businesses don't know much about IT project management, so it can be worth trying to educate them and convince them to have reasonable expec

Many small non-tech businesses don't know much about IT project management, so it can be worth trying to educate them and convince them to have reasonable expectations. I would start by explaining that there are 6 project management variables: benefit, cost, scope, risk, time, and quality, and that you usually can't change one variable while holding all the others fixed. Scope in particular is an important issue to discuss with clients who want a fixed price; explain that unless the scope of the project is fixed, your risk is unlimited but your revenue is fixed. I suggest offering, as an alternative, cost estimates with tolerances; in other words, offer a time and materials contract, with a best estimate of the costs. In addition, agree to a tolerance - if your revised forecasts suggest you will exceed the tolerance at any point, you will contact the client and give them the option of cancelling the project and paying only for costs already incurred or setting a new higher tolerance. If a client really wants a fixed price contract, consider breaking the project down into smaller, lower risk, very well defined tasks, and contracting each one separately (and only quote later tasks when you have more information available from earlier ones, so you can add tasks for things like a second design iteration). Ensure that tasks which are already completed are paid for before new ones are undertaken, and that you have the contractual right to quit and still get paid for the tasks you completed.