There are two schools of thought when it comes to pricing projects regardless of the industry that you are in. Time and Materials based pricing and Flat Fee pricing. Jennings Technologies is a huge proponent of the Flat Fee structure so when I came across this information in an article by Alan Weiss yesterday I felt I had to share it.
Benefits of Flat Fee Project Pricing
- There is a cap on your investment. You know exactly what is to be spent and there are no surprises.
- There is never a “meter running.” You do not have to worry each time our help is requested that we might be here for an hour, a day, or a week.
- It is unfair to place you in the position of making an investment decision every time you may need our help. Otherwise, you’re trying to determine the impossible: Is this an issue that justifies a $2,000 visit or a $500 phone call. No client should ever be in that position.
- Your people should feel free to use our assistance and to ask for our help without feeling they have to go to someone for budgetary approval. This only makes them more resistant to sharing their views, and at best delays the flow of important information.
- If we find additional work that was unanticipated but must be performed, we can do it without having to come to you for additional funds. In those instances, legitimate, additional work would otherwise be viewed as self aggrandizing and an attempt to generate additional hours or days.
- If you find additional, related work that must be done, you can freely request it without worrying about increased costs.
- The overall, set fee, in relation to the project outcomes to be delivered, is inevitably less of a proportional investment than hourly billing.
- If conditions change in your organization, you won’t be in the difficult situation of having to request that the project be completed in less time. The quality approach is assured, since the fee is set and paid.
- If we decide that additional resources are necessary, there is no cost to you and we can employ additional help as we see fit.
- This is the most uncomplicated way to work together. There will never be a debate about what is billable time (e.g., travel, report writing) or what should be done on‐site or off‐site.
Posted under Save Money
This post was written by Stephen Jennings on October 1, 2008
Thanks for the kind mention.
Anytime Alan. Thank you for all of the advice and wisdom you have shared over the years. It has truly made a huge impact on my business and many others. Much appreciated!