Re: Value-based pricing strategies

Mike,

When I was Intel it was a requirement with NPV calculations to be done
within 18 months for any improvements.  If the ROI did not show a return in
18 months we didn't do the work. And trust me we had a tone of projects
going.  I'll due the same thing now when I need to justify a proposal.
Currently when I make the proposal I'll do a formal ROI only when they ask
or if I'm convinced I need it to close the sale.

At Intel for long term providers we were able to do performance based
contracts.  This contracts had bonuses and deductions for hitting and
missing targeted metrics.  On an ROI based metric if we were hitting the
expected metrics they would get their bonus.  If they missed they would get
a deduction on their support costs.

I only teach the overview technology course for the MBA program.  I also
teach undergrad and graduate technology courses.  These range from OS and
networking to project and program management.  It doesn't pay as much as my
hourly rates but it is a nice diversion.

A bonus or residual on profits. residual could be great but might be hard to
get approved by the owners.  I'd try it.  Also who owns the product?  That
might have an effect on what you can negotiate.

How much do I expect to grow?  I do consulting/VAR work so I expect the
whole business to grow 50% over the next year.  My limitation is finding
more people in Vegas to work for me.  It is really hard to find good people.

Let me know if you have additional questions

-- 
Regards,

Lawrence A. Rodis
President
Strategic Resource Consulting Group L.L.C.
A Microsoft Certified Partner
702-221-6274
[EMAIL PROTECTED]
www.strategicresource.com