Problem

Jerome Erickson is a retired school district administrator who now works as a consultant s...

Jerome Erickson is a retired school district administrator who now works as a consultant specializing in hiring administrators for school districts. Jerome used to charge a flat fee of $5,000 for each administrator hired, but decided to develop a new pricing structure. The new structure is as follows:

Due at signing:    $1,500

Contract review:    $125/hour capped at    8    hours

Contract formulation:    $125/hour capped at    12 hours

Applicant screening:    $25 per applicant

Preliminary interviews:    $125 per interview

Final interviews:    $175 per interview

Carol Ferguson is an overworked accounting clerk in a small school district. She sits at her desk, reviewing the pricing structure in the brochure from Erickson Consulting. She knows that Mr. Erickson is one of the most highly regarded educational consultants in the state, but is not sure that the district can afford him. The school board had voted to budget $5,000 for the district administrator search, based on Carol’s recommendation.

 Presuming that Carol is correct about the number of applicants, what are some ways that Carol can reduce her costs? What would you recommend?

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