November 29, 2017

“Who does value pricing benefit?”

Here’s a common question from someone considering switching from hourly billing to value pricing:

Does the move to value pricing typically benefit the person providing the work or the purchaser?

When done right, both parties (i.e., buyer and seller) realize increased return on their investment.

Once a desired outcome and a price are agreed upon for a project, both parties have a strong financial incentive to reach the goal as soon as possible without compromising quality.

This results in better results being delivered faster which is beneficial for both parties, albeit for different reasons.

For the seller, their costs (i.e., hours of labor) have been minimized and their profits have been maximized.

For the buyer, their time to market has been minimized and their competitive advantage has been maximized.

Win win!