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A fixed fee project that runs over, and how value based pricing compares

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The prompt

Cedarway Consulting (fictional) agreed a fixed fee of USD 600,000 to redesign a Saudi retailer's buying process. It planned 2,000 team hours at a cost of USD 150 per hour (pay and benefits). The work took 25 percent more hours than planned. What was the planned margin, and the margin after the overrun? An alternative offer was 10 percent of the first year's savings, which turned out to be USD 8 million. Compare.

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