A good pricing strategy is key to the success of any business venture. One of the pricing models that is popular among modern enterprises is cost-plus pricing. Cost-plus pricing is a pricing strategy wherein service providers initially add the direct material cost, the direct labor cost, and overhead to determine what it costs them to offer the product or service. A markup percentage is then added to this sum to arrive at the selling price.
The Cost Plus-Model is designed to make the cost drivers of services delivered to customers more transparent. Its implementation is often a vital part of a client’s IT organization and is billed for the most critical requirements for delivering offshore managed services.
One of the big names in offshore IT management is ProV, a global consulting firm that specializes in delivering premium IT solutions and services. Given the fact that outsourcing saves you money, you should exploit the benefits that come with ProV's cost-plus pricing model. Here are four ways that the ProV's cost-plus model is helping businesses in the new decade:
Few Resources Are Expended
The cost-plus pricing for offshore managed services that do not require a lot of extensive market research because the cost of ProV's offshore IT management is easily determined by placing a reasonable margin on top of summed costs. It is this simplicity that makes this pricing model so popular among modern businesses that require offshore managed services.
Full coverage of costs
ProV's cost-plus model also covers the full cost of offshore IT management, so it is easier to work with an offshore development team. The costs which are calculated per user or service are added in a way so that the full cost of delivering a service by the offshore development team is covered. Even in the event of costs that may not be accounted for, increasing the arbitrary margin can cover these costs and other sudden fluctuations.
It is A Great Hedge
Cost-plus pricing helps businesses which have no information about a customer’s willingness to pay, especially when there is no direct competition in the marketplace. In such an instance, the only information available to arrive at a pricing decision would be the calculation or estimation of your costs. With cost-plus pricing, businesses have a hedge from which they can arrive at a starting price. This is why the cost-plus pricing is often considered the most rational approach in maximizing profits.
Stability
Cost-plus pricing offers a guarantee against incurring losses. In the event of a fluctuation in costs, markups and other appropriate steps can be taken to accommodate the variations in price. This leads to price stability and helps businesses to stay more attractive to their customers.
Conclusion
Hiring an offshore development team just got easier with ProV's cost-plus pricing model. Businesses are now able to leverage its benefits to grow their businesses. Ready to learn more? Request a free consultation or contact us today!
