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Posted by on May 13, 2019

There are many reasons why businesses fail. One of them is the unfitting pricing model. But this is a problem that could be avoided by the project managers. The quick challenges which a business that is operating with the wrong pricing model will face are:

• To lose of profits due to the price undervaluing,
• The loss of clients as a result of inconsistent pricing.

None of these consequences will leave your business standing. Thus, it is imperative for the project manager to considerately choose the right pricing model. There are basically two models of pricing. There are time and material contract and fixed-price contract. Each one has its pros and cons. However, one model can provide more benefits to your firm than the other. If you want to know which one which suits your company, here are the details for the two. Learn more here about cost accounting.

The advantages of the fixed-price contract are that they come along with the pricing guarantee. In case the project does not go beyond the well-defined extensiveness and responsibilities, then the price is not going to change. The fixed-contracts come will a well stipulated work with clarified periods and deadlines. Since the extensiveness of the work is clearly stated in the contract, numerous companies find the project quite modernized. With this pricing model, however, the client is likely to pay enormously more than the other pricing model (the time and material contracts). In case of an error, these contracts will take a long time to prepare and reorganize. Thus, the new pricing will be indispensable, when a client comes with different requests which have gone beyond the organized scope of the work. Therefore, fixed-contract will be difficult for you, if you expect some changes with the nature of your service. Click here for more info:

The Time and Material Contracts
On the other hand; the customer will pay according to the materials and the hourly rate of your work with the time and material contracts. With this contract, there is no work restrictions or solid deadlines but the plans of the project are flexible. Since the needs of the clients and their budget can vary, the service provider will familiarize with them. Services like; branding, software design, and development, building construction, are often classified into this pricing model. Both, the service provider and the service beneficiary, do comprehensively benefit from such pricing model. This is a type of contract which allows clients to manage their budget and service. According to the needs they have they will choose services to pay for. With this contract, projects are often divided into phases. Which allows the service provider to assess together with the customer the end of every phase and check what has not been accomplished and examines where they are in the budget of the customer. Get more details here:


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