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Wednesday, July 05, 2006

Fixed Price Contracts: How Do They Work for First-Time Customers?

Fixed price contracts are often the best option for customers working with you for the first time. These types of contracts can ease customer worries and increase your chances of getting paid appropriately. The main purpose of fixed price contracts is to establish a willingness and ability to pay so you can then build a strong relationship.

When you create fixed price contracts, you are working with customers rather than clients. A customer is not a client until they can prove they will be there for the duration of the first project and beyond. Setting a price fixed contract with a first-time customer will help make your client more willing to accept your solutions and ideas because he/she will feel there is less risk involved. Don’t worry about fixed price contracts working out to less per hour than your typical hourly rate. The most important part of these contracts is to make customers into clients by determining an ability and a willingness to pay.

CONDITIONS OF FIXED PRICE CONTRACTS

Fixed price contracts only work if you have a project with very clear boundaries. You can’t really set up fixed price contracts with emergency service calls because you can’t know what you will be encountering. Don’t commit yourself to spend three days on a server rebuild for a fixed price contract of $250.

You should put a few sentences in all fixed price contracts that explain the contract is subject to credit approval. If you decide to grant credit, make you have a way out jf customers won’t give you a credit application or will not fill it out completely. The first fixed price contract will always be the most uncertain so you want to think of yourself first.

The most important thing about fixed price contracts is that they are more likely to leave you stuck with an unpaid bill when you create them with new customers. Fixed price contracts can help attract new customers and turn them into long-term clients, but you need to make sure these customers can pay the bills and are willing to engage with you in longer term agreements.

Added By: Computer Consulting 101