Contract Pricing and Negotiations.

Added on - Sep 2019

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Answer 1- The three seller pricing strategies are Cost-Plus (Penetration) Pricing, Demand(Skimming) Pricing, and Buy-In strategy pricing respectively.The Cost-Plus (Penetration) Pricing discusses the most rational way which needs to be adoptedin determining a minimum acceptable price of a product. Cost-Plus (Penetration) Pricing strategyis applicable under apparently low-profit margins market conditions. The strategy stronglydiscourages would-be competitors from making entry into the market under low-profit marginscondition (Li et al., 2015).The Demand (Skimming) Pricing focuses on economic theory, which describes the concept ofthe industry and Finn’s demand curves. Demand (Skimming) Pricing approach assists firms whoare interested in introducing new technology or innovation in the marketplace. Demand(Skimming) Pricing strategy let such firms analyze the obvious risks in the prevailingcompetitive market conditions (Spann et al., 2014).The Buy-In strategy approach is primarily based on profit motives. The firm's resources andmarket conditions play a major part in ascertaining to which options can be considered to be themost appropriate one. In an attempt to assist low profiteers in determining the price of theirproduct, buy-in strategy enables to guide them about the prevalent market condition by providinga platform which allows low profiteers to beat the competition under fairly enough low price(Aceves-Bueno et al., 2015).
Answer 2 - The three types of contract types are cost reimbursement contracts, fixed-pricecontracts and unit price contracts.The cost reimbursement contract guides the buyer who isunaware of current market workflow and is thus beneficial for them in analyzing the market. Thedrawback of cost reimbursement contract is that it is a one-way channel, and since there is nolimitation or boundary marked to check the activity of sellers, buyers are encountered to payunreasonable rice of the product with their consent or awareness (Roberts et al., 2014).A fixed-price contract is beneficial for buyers as they are more likely to make a profit here. Thescenario explains that in the fixed-price contract both buyers and sellers decide a certain fixedprice for any products or services and once the negotiation and price fixation are done, sellershave to abide by it. The drawback of a fixed-price contract is that situation might be unfavorablefor buyers if sellers start lowering the price when the project is delayed, or quality of deliveredwork is not met up to expectancy (Chen, 2016).Unit price contract is beneficial for sellers as they make a profit out the business based on anhourly basis, especially freelancers. The major disadvantage of unit price contract is that ifproject managers do not utilize their analytical skill to make contact with a right service provider,the likeness of business downfall increases (Mandell et al., 2014).Answer 3 – The substantial small business program managed by the federal government for itscontracts is highly beneficial for meeting the government’s contract requirements. To support thefacts, we have taken the help of newly launched small business administration (SBA) final ruleand its small business program managed by the federal government, that came to be effective onJune 30, 2016, with an aim to impact both small businesses and large businesses that work incollaboration with small businesses, in an attempt to perform work on behalf of federalgovernment’s contracts. The final rule and its program came into existence to increase
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