One important element of a fixed price proposal is managing change orders. And when I say, change orders, I mean not having any.
The whole purpose of being fixed price is being fixed. What would be the point if the price kept changing via change orders?
So when you price a project and submit it, that’s the final price. As a professional, you assume the risk, which is one reason why you can charge larger amounts. If you make the mistake of underestimating your engagement, that’s *your* responsibility. The client shouldn’t pay for your miscalculation.
This also means making sure the price is high enough to account for risks. The riskier the client or the project, the higher the price.
The only exception is if project goal changes. You’re working towards a specific outcome, so if that outcome changes mid-project, it invalids your proposal and you need to re-evaluate.
Next, there’s the concept of a $0 change order. This always seemed odd to me. It feels like a small slap on the wrist, and it doesn’t have any meaningful impact.
It also draws attention to the contract, in which every little thing needs to be documented, tracked, and audited. It encourages a similar perspective in the client, scrutinising what’s allowed and not allowed. This is the opposite of a good partnership, which has an acceptable level of understanding (i.e. grey zone).
The takeaway
Don’t do change orders. Set your prices high enough to account for any variables and then commit to it. It’s also a great way to build a trusting relationship with your client.