The last few days I’ve been talking about aligning incentives from the point of view of a business that provides services to other businesses. I discussed pricing models as the primary tool for aligning those incentives and discussed how each of three pricing models – hourly, project based, and retainer – affects each party’s incentives.
After writing each part and reflecting on what I wrote, I noticed that I brought up the topic of tension frequently. I portrayed tension between you and your clients as a bad thing and that’s because I don’t like tension in my life. That doesn’t mean it is a bad thing for you and your business.
Like any advice, what I write is based upon my experience and my preferences. I’d also tell you not to “invest” in the stock market or ride roller coasters. I feel like reducing risk in my life means I can concentrate on making better things.
The type of relationship you have with your clients also depends on your goals. A tense relationship with a client might mean you are able to have higher profits from them. Higher profits aren’t my goal.
For now, that wraps up my series on aligning interests with your clients. I’m still hoping I can find that magic formula to perfect pricing and if I do, I’ll share it.