1 Charging for Expertise 1.1 Recognizing Expertise Michael provides a service to his customers, so his primary product is his time and expertise. Service providers can determine price is several ways: + Charge for time and material - This price is used when the service provider is unsure of what conditions will be found on the job. For example, Michael may be asked to rewire a network where the existing wires run under flooring. Because he does not know what he will encounter under the flooring, he can only guess how much time it will take to complete the job. With time and material pricing, the customer understands that the actual price may be different if the job requires more hours or additional material. To calculate the price, the service provider estimates the time that it will take to complete the job and how much that time will cost the business in wages. The service provider also estimate which materials will be needed to complete the job and the cost of those materials. The providers total these costs and then add an additional amount to cover other business expenses and profit. + Give a fixed project cost - A fixed price for a project is often used when service providers are confident that few unexpected problems will complicate the job. A fixed project price is determined in the same manner as a time and material price, but the fixed project price does not change if the job takes more or less time and material to complete. + Work on a monthly retainer fee - A retainer is an agreed-upon amount that a business regularly pays service providers to be available when the business needs them. For example, a business could pay Michael each month to maintain printers or to be available to answer employees’ computer questions.