Some time ago the development team at my firm staged a revolt against the sales team and senior management: our demand was that no SOW* (Statement of Work) was to be sent to a customer without first being reviewed by a member of the development team. The message was clear “We refuse to be held responsible to deliver on terms in which we had no say”. Today it's not uncommon for a senior member of the development team to author an SOW in its entirety. IT people are good with documents and detail oriented. They are good at breaking down large ideas into small, manageable chunks and great at finding loopholes. In many ways IT people are better equipped than sales staff to write an SOW. However, today I would like to explore an important aspect of any Statement of Work: the pricing model.
Though there are countless pricing models in use throughout the world, the two that are most prevalent in the IT world are:
Fixed Price (also referred to as Fixed Fee): Here both the price and the scope of wor