Tool
Summary
Commodity services can be provided at premium rates if they are associated with the implementation of an important vision (e.g., building a castle) and not just every-day services (e.g., laying bricks).
There are three ways to set a price:
- Based on the cost of what is delivered plus a fair profit.
- The price of the next best competitive offering.
- The value delivered by the offering adjusted for uncertainty.
In general, set a price based on cost when it is mandated; e.g., when doing cost-plus work for the federal government. Set price based on competition when there are competitors. And price based on value whenever you can!