Why Your Firm Needs to Offer Fixed Prices

Pricing is the moment of truth––all of marketing comes to focus in the pricing decision.
–Raymond Corey, Industrial Marketing:  Cases and Concepts, 1962

In the last article we explained why hourly billing is the incorrect theory of value, and why The Firm of the Future will price its services based upon external value provided, not internal efforts generated. One of the most successful methods adopted to implement Value Pricing is the Fixed Price Agreement (FPA). Essentially, this requires meeting with each of your customers to determine the services they need and want over a given time period.

It is important to keep in mind any FPA drafted between your firm and a customer is the result of a conversation. This is your chance to provide the customer with a customized list of services to meet their specific needs and wants, to offer a fixed price for those services, specify the payment terms, the scope of services to be provided, and any other level of agreement reached. Thus, no two FPAs should look alike––they should be as unique and individual as your customers. The more customized it is, the higher will be its perceived value.

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About fblauer

Fred Blauer is a senior consultant with more than 20 years of experience providing information systems consulting, ERP implementation, syste
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