[pengwing]

I agree with your initial idea, but you lost me at "hourly rate". I think doing fixed prices for fixed scopes allows any agency to scale up to a certain point. (Instead of disincentivizing efficiency through hourly rates)

[TrapLord_Rhodo]

Depends on whether it's internal development or external recs. I've had alot of success doing T&M's for the State and local governments. It consumes the resource for your agency, but the rate arbitrage is attractive.

But yes, as you scale from just being you to multiple people you should have fixed proposals and ideally, an annual maintance and monthly retainer.