Outsourcing Services – The Different Kinds Of Pricing
Outsourcing services have now been a part of every business life. It has become part of the growing economy. But how can it be a real help to every entrepreneur or company?
First, let’s know and understand what the meaning of outsourcing is. Outsourcing is providing services to other companies. Outsourcing services range from the smallest tasks to the biggest services especially in Information Technology.
Reasons for Outsourcing Services
There are a lot of reasons why companies choose to outsource. Here are some points:
1. More affordable labor rates
2. Access to professional’s expertise (IT and other specialties)
3. Lacking resources
4. Efficiency intensified
5. Flexible employees ready to adapt to any situations
Though outsourcing services are good solutions to meeting the increasing demands of your business, it is still difficult to find a good worker. Meeting your expectations on quality is very hard and depends on whom you hire. The ones you hire at times could be the best in his line of work, some are not. But the main reason as to why it is really difficult to meet the expectations is that the employer is looking for an expert who could give him quality outsourcing services at a very low cost while the employee, since he is providing his expertise, expects to have higher salary rate.
How To Grow When Outsourcing is Not an Option
Pricing Outsourcing Services
Well, the real question is who gets to set the price of each outsourced task? It is kind of difficult to answer who really sets what. But in the world of outsourcing services, there are kinds of pricing that sets the contract of a specific task.
a. When the vendor sets the price for a specific task or level of service, the term for this is Unit Pricing. The clients will pay based on the handling of that specific task. Example, should you be outsourcing website maintenance, the client should pay the set of price determined by the vendor.
b. If the client pays at a predetermined rate at the bottom end of a vendor’s given service but authorises for some choices or pricing depending on the kind and level of services is called Variable Pricing.
c. Should there be a written contract that the client pays the vendor for the actual price with the fixed profit percentage, it is a Cost-Plus pricing. This kind of pricing is not very flexible since technologies advance very fast and that businesses mission and vision change as well. It offers a very little incentive to vendors or the worker to perform efficiently.
d. There is an opposite to Cost-plus pricing and most people love this. Performance-based Pricing has a rule that lets suppliers pay an amount as a penalty for any service that is done in poor performance. Also, the buyer gives an incentive financially for an excellent job or to perform optimally. This kind of pricing is really getting more popular among freelancers who offers outsourcing services and even to business owners who want their tasks done by an expert. This has also been booming with those who were not satisfied or dismayed with the quality of job in the previous given tasks.