Chapter 38
Performance-Based Contracting
Basing fees on results
The pattern
Performance-Based Contracting implies calculating the price of a product by considering the services it renders, rather than its face value. Such services are measured as a precise output quantity for which customers pay the company a specified amount (WHAT?, VALUE?). This amount typically includes all pertinent costs such as operations, maintenance and repair expenses, so that customers can more easily control their costs (WHAT?). It is important to note that the use-intensity of the product is irrelevant to pricing, making it essentially the opposite of Pay Per ...
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