Pricing Structures Pros and Cons
Pricing Structures Pros & Cons
Choosing the right pricing structure for your project can mean the difference between success and failure.
- Fixed Bid: Fixed-bid pricing is a set scope of work with a fixed price. You tell the client exactly what you are going to do and exactly what it is going to cost
- Hourly: You and your client agree on an hourly rate. You track your hours and bill your client in regularly agreed-upon intervals (such as weekly or monthly).
- Retainer: Retainers are also based on hours spent on a project. Typically, you give the client a discounted rate for guaranteeing you hours (usually by month).
- Bucket of Hours: A bucket of hours is similar to a retainer, but the hours aren’t required to be used each month. For example, you could sell your client a bucket of hours at a reduced hourly rate and give them 6 months to use the hours.
- Dedicated Resources: Slightly different from retainers, the dedicated resource structure allocates certain employees to a client for a certain period of time. Retainer structures buy hours. Dedicated resource structures buy people.
- Partnership: Partnerships share the risk and the reward of a project. The agency performs work and their compensation comes when the work produces results for the client. These arrangement are often tied to sales and growth increase.