Scribd Logo
Upload

Welcome to Scribd!

  • Notes For Contract Pricing

    Uploaded by

    Bbjhe Silfavan
    22 views2 pages
    There are two contract pricing models: fixed price and time and material. The fixed price model sets a predetermined price for a project's scope of work and deadlines. It provides predictability for both clients and service providers but carries risks. The time and material model bases the price on actual time and resources used, making it more flexible when needs are unpredictable but removing cost certainty. In practice, contracts may use aspects of both models.

    Original Description:

    Original Title

    Notes for contract pricing

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Report this Document
    There are two contract pricing models: fixed price and time and material. The fixed price model sets a predetermined price for a project's scope of work and deadlines. It provides predictability for both clients and service providers but carries risks. The time and material model bases the price on actual time and resources used, making it more flexible when needs are unpredictable but removing cost certainty. In practice, contracts may use aspects of both models.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as pdf or txt
    22 views2 pages

    Notes For Contract Pricing

    Uploaded by

    Bbjhe Silfavan
    There are two contract pricing models: fixed price and time and material. The fixed price model sets a predetermined price for a project's scope of work and deadlines. It provides predictability for both clients and service providers but carries risks. The time and material model bases the price on actual time and resources used, making it more flexible when needs are unpredictable but removing cost certainty. In practice, contracts may use aspects of both models.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as pdf or txt
    of 2

    Contract Pricing Models

    There are two (2) pricing models:

    1. Fixed Price:
     Easy to plan and more predictable than other pricing models.

     A fixed, pre-agreed price per unit is negotiated.

     Advantages for service providers: it is known in advance what will be paid


    and what will be delivered.

     Advantages for clients: provides greater cost certainty.

     Disadvantages: several risks with capital requirements and lower


    flexibility.

    Example: Consider a fixed price contract with a Jay, a web designer to design a
    website for your company. His contract may include:

     Designer: Jay
     Service: six-page website
     Price: P250,000

    No matter how complex the website is, or how much time it takes to complete,
    the price will remain P250,000. Since this is a service the designer always has
    available, this price will remain valid indefinitely.

    2. Time and Material.

     The price for service is based on the time and material that was used.

     Used when a service is very flexible and it is not predictable in terms of


    how much time and material is needed.

     In some cases, a maximum price for the service is negotiated by the


    client/ customer to build in some control or safety level.

    Example: A homeowner pays a landscaping company an hourly rate to install the


    plants he purchases from them.
    In practice, it is often a mix of the above mentioned pricing models that is used.
    SUMMARY
     There are two pricing model: the fixed pricing model and the time and material
    model.

     Fixed pricing model is a contract where the client and the contractor agree on
    the scope of work, the deadlines, and the amount of budget needed for the
    implementation of the project before the process of the development starts.

     Fixed pricing models is easy to plan and more predictable. It provides cost
    certainty to the clients and as for service providers, they are aware in advance of
    what will be paid and what will be delivered.

     Time and material model is more flexible especially in terms of development


    timeframes and budget required.

     The price for service in the Time and Material model is based on the time and
    material that was used.

    Prepared by:

    Jhe Silfavan
    BSBA FM-2B

    You might also like