(b) Retroactive pricing in the ceiling after the conclusion of the contract. Unexpected benefits This clause offers many advantages. By specifying the services you experienced at the time of the creation of the FPA, you leave many opportunities to provide additional services, and since customers pay you for unlimited access, it is more likely that they will choose you to provide these additional services, effectively eliminating competition. Another advantage is that change orders can by nature manage the marginal services desired by the customer and not with what the customer needs (because the FPA has taken care of its basic compliance needs) and get premium prices. For private construction companies and service providers, a fixed-price contract approach can attract more private and professional customers. Customers generally prefer to know the cost of labor in advance rather than accept the uncertainty of an hourly and material billing structure. Companies sometimes limit fixed-price contracts to certain dollar thresholds, as agreement on certain prices and conditions is more important for projects with a higher dollar. The American Boeing KC-46 Pegasus contract was a fixed-price contract. Because of its history of cost overruns, this is an example of how fixed-price contracts transfer risk to the seller, in this case Boeing.
The total cost overruns for this aircraft amounted to approximately $1.9 billion. [6] However, Boeing was able to absorb these costs and obtained authorization from the U.S. Air Force to produce the KC-46. [7] To enter into a fixed price agreement, all project activities must be completed. This includes: termination clause This clause also eliminates the risk for the customer and reduces the buyer`s remorse. The use of pooling and the offering of a single price for all APF services raises the question of what to do if the client terminates the relationship before all services are provided. In this case, you simply have to agree on the value in relation to the payments made, and one party owes to the other. The customer already has the option to pay the value they considered the service guarantee, so don`t let this detail stop you from bundling your services into a single price. C. PAYMENT: The Sponsor agrees to pay the University a fixed amount of dollars [AMOUNT] for the provision of the Services, payable as follows: (1) fifty percent (50%) ($[AMOUNT]) upon execution of the Agreement; (2) forty percent (40%) ($[AMOUNT]) in the middle of the project ([DATE]); and (3) ten percent (10%) ($[AMOUNT]) after the university has substantially completed the services (together the „overall contract price“). .