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Pricing: haggle or not haggle? Fix bid versus open offer

December 20, 2012

An important consideration on any software investment (hopefully not the most important) is the price. The price of anything is how much someone else is willing to pay. What we are willing to pay is based on what we expect to obtain. After we have ensured that each bid provides the features and functionality we need, the next question is, can we reduce the price?

Publishers and resellers are always very inclined to provide motivation to acquire a new customer. This motivation usually takes the form of a discount on both the applications and services. However, one should be watchful for excessive discounts. Keep in mind that these investments are intended to last a long time (normally no less than 5 years, but usually an average of 10) and software firms may expect to find ways to make up for extreme discount in future services or applications.

One way to mitigate is to request a long term fixed bid. In order to have a successful implementation based on a fix bid you need to have a very detailed project plan, which should be reviewed before agreement very carefully. This will ensure that all requirements are covered and that there are not any miscommunications in the process. Fix bids are usually higher priced than regular bids, as the consulting firm usually needs to make provisions for unexpected situations. But in some cases it may be worth to pay the overprice in order to limit or eliminate future expenditures.

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