Contract Management: Fixed-Price Contracts

You may offer services to a customer at a fixed price, which is not based on the service's usage, as with a fee for internet connection or domain name registration. In fixed-priced contracts, a fixed price is set from the outset and will not change unless there is a change in scope. A fixed price contract allows a customer more predictability about the service (or products) costs in the future. You generally collect such a fee on a schedule—for example, once a year or on a monthly basis.

Consider an example: You offer domain name registration and maintenance for a year with the option to renew the contract. To implement such a scenario, you would do the following:
  1. By using the Non-Stock Items (IN202000) form, you create the Domain Name Registration and Maintenance non-stock items, which represent services you offer.
  2. On the Contract Items (CT201000) form, you create a contract item and specify its key settings on the Price Options tab as follows:
    • In the Setup Item box, you select the Domain Name Registration non-stock item and specify the pricing policy for the setup item. The specification of this item reflects that you will provide a domain name (which is represented by the Domain Name Registration non-stock item) and bill for it during the contract setup stage.
    • In the Renewal Item box, you select the Maintenance non-stock item and specify the pricing policy for the renewal item. The specification of this item reflects that you will provide maintenance (which is represented by the Maintenance non-stock item) only after renewal and bill for it when the contract is renewed.
    • To bill the customer for maintenance during the first year, you select the Collect Renewal Fee on Activation check box. The fee for the renewal item will be included in the first invoice.
    • You fill in other required settings (and any optional ones) at your discretion.

    For details on configuring contract items, see Contract Item Creation: To Create a Renewal Contract Item (Regular Contract).

  3. By using the Contract Templates (CT202000) form, you create a contract template as follows:
    • You set the Contract Type to Renewable and the Duration to 1 Year.
    • You specify Year as the Billing Period.
    • In the Billing Schedule Starts On box, you select Setup Date.
    • You fill in other required settings (and any optional ones) at your discretion.
    • You add the contract item you have configured to the contract template.

      For details on configuring a contract template, see Contract Template Creation: To Create a Regular Contract Template.

  4. You set up and activate the contract. An invoice for domain name registration and maintenance is issued automatically as a result of the setup procedure. For more information, see Contract Setup and Activation: General Information.
  5. In a year, you renew the contract. An invoice for maintenance only is issued automatically as a result of the renewal procedure. For details, see Contract Management: Contract Renewal.

You can combine fixed-price contract items with ones that are billed based on usage. For example, suppose that you provide bandwidth or disk space along with a domain name. In this case, you could include in one contract item a domain name as the setup item and some quantity of disk space as the recurring item, or you could create separate contract items.