While some contracts include fixed prices, others need more flexibility to deal with changing quantities and types of work. Here are three things that the parties can add to clarify the fluctuating costs:
1. Require preapproval of some expenses or any that cost more than $X - Many contracts with flexible pricing preapprove related costs and expenses up to a certain dollar threshold. But above that, the parties should be a conversation.
2. Include prices for any out-of-scope services - If the contract says that you have to use the seller to repair, update, or do anything else for the product, make sure you include the price for those services. Otherwise, the buyer may be stuck paying unreasonable fees.
3. Include pricing adjustments to address future changes - No one has a crystal ball to know what will happen. When you don't know what you may need or when to consider adding a price adjustment mechanism. These can reflect inflation, actual use of the product, or other variables.
What other pricing approaches do you use or see in your contracts?
