skills/engagement-pricing/references/commercial-structures.md

# Commercial structures and negotiation

## Terms that determine economics

For each proposed term, identify the client's requirement, the firm's position, the economic or delivery implication, and any approval needed under the existing engagement authority. Use supplied contracts and current jurisdiction-specific sources where interpretation is required. Do not replace negotiated terms with generic templates.

- **Fixed fee:** bounded deliverables, exclusions, assumptions, client inputs, review rounds, acceptance criteria and review period, and priced change control. Distinguish an estimate from a committed delivery date.
- **T&M:** rate unit, billing increments, time approval, expense policy, travel treatment, capacity, reporting, and caps. State what happens at the cap; it does not imply unlimited scope.
- **Retainer:** service scope, included capacity, response expectations, rollover, overages, review interval, term, and termination. Define whether the client buys access, reserved capacity, outputs, or a mixture.
- **Outcome-linked:** baseline, eligible benefit, exclusions, measurement owner, evidence source, attribution, performance period, settlement timing, caps/floors, disputes, and treatment of factors outside either party's control.
- **Hybrid:** separate the base fee's deliverables from contingent outcomes so the same work is not billed or rewarded twice.

Model cash collections against spending. Retention at acceptance, long payment terms, and client-caused delay can create funding needs even on profitable work. Identify who carries that exposure and whether the proposed terms price it adequately.

IP, licensing, confidentiality, liability, termination, and dispute clauses should reflect the work, existing agreement, and jurisdiction. Distinguish client-specific deliverables from pre-existing methods and tools. Do not invent a universal liability cap or promise free remediation. Identify exceptions for the relevant commercial or legal owner without blocking drafting of unrelated sections.

## Negotiation preparation

Know the cost basis, target, and approved floor. Identify useful exchanges: scope, staffing, pace, payment timing, volume commitment, or explicitly approved reference rights. Quantify concessions in fee, margin, capacity, and cash terms. A rate reduction is one possible concession; do not ban it when it fits the firm's commercial policy.

Price alternatives on comparable assumptions. A lower fee achieved by silently removing quality assurance or senior coverage is not a comparable offer. Do not invent competitor prices or win probabilities. Record the evidence behind willingness-to-pay estimates and distinguish inferred procurement priorities from stated criteria.

Prepare the response to likely objections using proof of relevant outcomes and a transparent delivery model. Keep credentials and client results sourced. The draft should make the next commercial decision easy without claiming that proposed terms are agreed.