MARCH 1989

Competing on price means more than just offering a lower rate. For providers of professional services in particular, it can help to be innovative in the way you price your work.

James E. MacDougald, CEO of Applied Benefits Research Inc., in Clearwater, Fla., says he enjoys a major advantage by charging a package rate rather than by the hour. Clients don't feel like they're writing a blank check; they know exactly how much they will pay for his firm's consulting work on employee benefits. And because the second half of the payment is due only on satisfactory completion of the work, customers feel they are guaranteed a top-notch job.

That arrangement keeps MacDougald and his employees working hard on quality. "It forces you to sharpen your quality control," says MacDougald. "You can't ever afford to get fat and lazy. I like that pressure -- it makes us behave as the customer wants us to behave."

For the system to work, according to MacDougald, a provider must be well organized as well as self-confident. "The key is to define the project in advance," he says.