Fixed pricing

A model of pricing in which a project is undertaken by the service provider for a pre-agreed-upon price. One advantage is that it's easy for the client to budget for the project. Two disadvantages are that the service provider may overestimate costs beforehand for possible unforeseen conditions or cut corners during the project to compensate for expenses that are higher than anticipated. The service provider will charge a premium for a fixed price relative to the risks involved. Appropriate for efficiency deals.

Contributed by: E-Business Strategies