When it comes to non-tangible work like facilitation, consulting, coaching, and support, the decision becomes even more critical. In this article, we will discuss the pros and cons of different pricing models and the challenges of waterfall (up-front planning) versus agile (iterative working) approaches.
Fixed Price for Agreed Up-Front Deliverables, with Process for ‘Change Control’ for Deviations
This pricing model offers predictability and certainty for both the client and the service provider. The client pays a fixed price for a set of agreed-upon deliverables, and if there are any deviations from the original scope, a change control process can be used to manage the changes and ensure that additional work is compensated for. However, this model can be risky for the service provider if there are any uncertainties or ambiguities in the project scope.
Time and Materials Price for Work Agreed Weekly
This pricing model offers flexibility and agility for both the client and the service provider. The client pays for the actual time and materials used by the service provider, based on weekly agreements for the work to be done. This model allows for an iterative approach, refining and improving the solution as they go along. However, this model can be risky for the client if the service provider doesn’t manage the project properly or if there are any misunderstandings about the scope of work.
Capped Price for Work Agreed Weekly
This pricing model combines the predictability of a fixed price with the flexibility of a time and materials model. The client and the service provider agree on a weekly or monthly budget, but there is a cap on the maximum amount that can be charged. This allows for some flexibility in the project scope while still providing a degree of cost control. However, this model can be tricky to manage if the cap is set too low or if the project requires significant changes or additional resources.
This pricing model provides a degree of predictability for the service provider while also offering some flexibility for the client. The client pays a fixed fee upfront for a set period of time, and the service provider provides a certain amount of work each week or month. This model allows the client to change their requirements or priorities as they go along, but it can be risky for them if the service provider doesn’t deliver the expected work each month.
This pricing model provides a clear framework for the project and allows the client to track progress and ensure that the work is being completed on schedule. However, it can be inflexible if the project scope changes or if the milestones need to be adjusted.
Agile vs Waterfall Approaches
When it comes to non-tangible work like facilitation, consulting, coaching, and support, agile approaches tend to be more effective than waterfall approaches. Agile approaches allow for flexibility and iterative working, refining and improving the solution as they go along. Waterfall approaches can be rigid and may not allow for changes in the project scope or requirements. However, for some projects, a hybrid approach may be best, combining elements of both approaches to achieve the desired outcome.
In conclusion, selecting the right pricing model is critical for the success of any project, especially when it comes to non-tangible work. Each pricing model has its pros and cons, and it’s important to select the one that best aligns with the project goals and requirements while balancing the needs and expectations of both parties. When it comes to non-tangible work, agile approaches tend to be more effective, allowing for flexibility and iterative working. However, for some projects, a hybrid approach may be best, combining elements of both agile and waterfall approaches to achieve the desired outcome.
Adapt Consulting Company
We support businesses with people, process and technology change. Either small (eg SME start-ups) or large (eg privatisation of public-sector organisations).
We do this as Consultant/Project Manager sometimes setting-up an in-house Project Management Office (PMO) and Change Team. We also Mentor for programmes like the UK IoD BeTheBusiness.
#people #process #performance #projects #programmes #pmo #change #processimprovement #projectmanagement #changemanagement #workshops #mediation #coach #icfcoach #mentor #facilitation #training #jersey #channelislands