5 traps of fixed fee contracts

Fixed fee contracts can be great assets as well as disadvantages; it’s not that they’re bad in themselves, but they must be done right in order to avoid onerous consequences. When drafting a fixed fee contract with a client, here are 5 traps to avoid:

  1. The missing information. When doing a fixed fee arrangement, make sure to be as specific as you can about what is included and what isn’t in the contract. This can apply to the number of hours of work included or the number of revisions allowed on a plan. Also, any extras should be specified along with the rate at which these will be billed. This helps settle disagreements.
  2. Is it finished yet? Be very careful how you define a work as completed. Is it after the required hours have been worked? Is it if the customer accepts the work done? Is it based on specific requirements provided by the client? Being specific about when the work is done helps curtail the “one more thing” problem with clients who always want more.
  3. Forgotten costs. When putting together the proposal for a fixed fee contract, it’s important to think about all your costs. That includes time spent by administrative personnel, travel expenses, or even luncheon meetings. You should also think about technical support costs and factor those in.
  4. What about after? The fixed fee contract should also include the cost of post-project support. Just like the cost of customer service is built-in the products we buy, so should we include it in our fixed fee contracts – unless we exclude it.
  5. How full is the glass? No one wants to think about problems we might have in a project. We all want to feel competent and able to complete our projects on time. However, when estimating a fixed fee contract, pessimism rules. Planning for the project to take longer builds leeway for us down the line.

Precision and efficiency are most important in a time management et billing software like Abak 360.

Leave a comment

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: