Doing business in the Middle East, we ran into the mistake of not intentionally pricing 20% higher than what we were actually aiming for. Even if you’re not act

Doing business in the Middle East, we ran into the mistake of not intentionally pricing 20% higher than what we were actually aiming for. Even if you’re not actually looking to negotiate, you still need to keep a buffer for the negotiator to claim he’s done his job effectively — and some room for his boss too. Doing contract work, I usually find that eventually extra work gets identified during the project; no one wants to do the paperwork around a change order (or more importantly, explain to their boss[es] why a change order is needed), so the easiest solution is to pad the initial pricing to account for it, and then when it comes up do it pro-bono. The larger the company, the more you buffer, as the paperwork gets worse and the misidentified scope becomes more likely. And then of course a lot of companies end up with “yearly budgets”, and are price-insensitive as long as you stay in their remaining budget. Not pricing as much as the budget allows is just leaving money on the table. That is, the floating price isn’t just some sales fuckery to trick buyers into bad deals (although it probably often does happen) — there’s some legitimacy to the madness. And buyers love haggling; IME it starts with haggling on direct price/effort, and then with haggling on scope. They want the project price to be fixed after haggling, not before.