From the course: Consulting Professional Weekly Tips

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How to set pricing for a project

How to set pricing for a project

From the course: Consulting Professional Weekly Tips

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How to set pricing for a project

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- When you're pricing a project, you can go with a flat rate, or an hourly or daily rate. Flat rate projects can be be very profitable, but if the scope expands, you could lose a lot of money. Hourly projects aren't as profitable but if the scope expands, you can make more money because you're charging for more hours. To set the rate for a project that's going to be flat rate work, use your standard hourly or daily rate, multiply that by a basic effort estimate, and build in a cushion for scope creep as well as a cushion for additional profit margin just to be safe. Recognize some of your cushion will likely be negotiated away during the contract negotiation phase. Factor that into your initial quote. To reduce scope creep risk, break the project down into multiple phases. Have each phase have its own flat fee. If the initial phase of a project grows and scope expands, you can always rescope the following phases and change your pricing accordingly. My firm was serving another…

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