A procurement manager is considering accepting a fixed price agreement for 12 months with an...

Afixed price agreementprovides stability and predictability. The supplier bears the risk of cost fluctuations, which is especially advantageous in volatile markets. Moreover, it simplifies administrative processes for the buyer over the contract duration.

“Fixed price agreements transfer cost risk to the supplier and enable simplified contract management. This can reduce overhead for buyers and support budgeting accuracy.”

(L4M5 Commercial Negotiation, 2nd edition, Section 2.1 - Pricing Models in Negotiation)