Is it smart to discount pricing over time in a multi-year contract?
I am preparing a 3-year contract for a Machine Learning platform. As the platform performs better over time, should I discount my pricing to make the contract look more attractive? Or would it be smarter to reverse the pricing change so that pricing increases over time, indicating our confidence in the platform as well as cover any unexpected growth or bugs that may require additional capital? Or should the yearly pricing stay static?
Not exactly sure what the best contract strategy is or how to think about this?
Hope this makes sense and let me know if I need to clarify anything.
The market will really drive your pricing. You should really be pricing based on how much the contractee is whiling to pay. I normally stick to static pricing for the term of the contract and renegotiate once it expires.
A good lesson from Real Estate:
The house is worth what someone is willing to pay for it, not its location, it's quality or any other material factor.
Yeah, I think you're right, adjusting to fit market demand and then keep that pricing static until the contract expires is the way to go. Thanks for your advice! Sometimes the simplest solution is the best solution.