When it comes to pricing, it is more of an art than a science. While numbers and math are critical to accurate pricing, the art of strategy used in developing prices can result in winning (or losing) contracts. Companies need to know the market, their competitors, and current economic conditions (top-down) as well as their costs to perform the work (bottom-up). Pricing for profitability requires a hybrid approach of pricing from both the top-down and the bottom-up. As a business owner, it is at your discretion to raise or lower prices, or to find ways to perform the work at a lower cost – all in an effort to maximize your profits.

Learning Objectives:

• Describe market-based (top-down) pricing
• List components of cost-based (bottom-up) pricing
• Describe the hybrid approach to pricing