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The definitive guide on how to price services to deliver profit, fund for product development and meet the needs of the customer/client at a price they are happy to pay.
As traditional manufacturing companies move to service provision, how should they price their services?
What pricing model should they develop and what buyer behaviour model should they nurture? What will happen if you get your services offering right, but your pricing model wrong?
Mastering Services Pricing shows you how to create pricing that allows you to deliver maximum profit and high client satisfaction.
· Learn that the ‘cost plus’ model won’t work for service provision
· Understand how your competitors will use pricing to gain market share, create growth and tie in existing customers
· Recognise that Product pricing is coercive, services pricing is collaborative
· Understand that services pricing includes lots of ‘frees’
· Understand market positioning and how this affects your price and how you can communicate this to clients
· Discover how to maximise profit and client satisfaction
· Be confident in your pricing strategy by having a sound basis for your decision making
Kevin Doolan is a solicitor and Senior Partner at Eversheds LLP where he is Head of Client Relations. Kevin has an MBA from Henley & teaches pricing at LSE, Judge Business School and IE Law School & will join the faculty of Churchill College Cambridge where he will be a lead consultant on pricing and business development. He also teaches at Harvard Business School where he developed the Harvard Case Study on Pricing. In 2008 Kevin won an FT Innovation Award for ‘Project Bridge’, which developed new approaches to pricing.
Table of contents
Introduction
1. How buyers buy services
You are selling three different services
Rocket Science
Relationship Advice
Routine work
the 5 P’s of Services Pricing
How to price Rocket Science
How to price Relationship Advice
How to price Routine Work
2. cost plus pricing and beyond
cost plus pricing
client driven pricing
competition driven pricing
how firms compete
strategy 1 – we are cheaper
strategy 2 – we are better (and we cost a bit more)
strategy 3 – we are niche / sector focussed
The competitive Landscape – market positioning the firm
3. PITCHING FOR WORK_________________________________________
Pitching for Rocket Science
Pitching for Relationship Advice
Pitching for Routine Work
Post pitch negotiation on price
4. NEGOTIATING PRICE__________________________________________
Price and scope are linked
Creating alternative offers
Swaps
Mid Deal negotiations
Strategies to win against procurement
How to approach a client with a price increase – making it “our problem”
Matching a competitor’s price – why do that?
5. THE PRICING LEVER__________________________________________
The Magnifying Effect – small changes in price = big changes in profit
The alternatives – cost reductions
The alternative – working more hours
6. ALTERNATIVE FEES___________________________________________
Project based costing
Project Management
Data use
conditional fees and uplifts
contingent fees – no win no fee
Retainers – monthly or annual
Value based billing
7. PRICING TACTICS_____________________________________________
White Label Sevices – different prices, different services
showing clients they are being brave by choosing a cheaper competitor
dealing with a “lowball” quote from a good competitor
the “trophy client” and low prices
clients with a good cultural fit
negotiation – take time
free periods and offers – better than discounts
have “no go” areas
stepped discounts
did you “lose it on price” – or not?
8. DRIVERS OF VALUE___________________________________________
Understanding value from the client perspective
Creating a service that targets the drivers of value
Example offers
9. LEARNING FROM INDUSTRY__________________________________
Market Segmentation
Bundling and Undbundling
Versioning
extras, Add ons and maintenance contracts
Gold, silver and bronze – most clients choose…
Launching an innovative new service – how do you set the price?
10. SAVING CLIENTS MONEY_______________________________________
Running a pilot project
Positioning the offer
Spend reduction workshops
pricing as a proportion of savings achieved
creating chargeable projects
11. MARKET DISRPTION AND INNOVATION_____________________________________________
Coping with reduced demand – what are the options?
Changes in demand – opprtunities to improve margin
Alternate suppliers – outsourcing and other new entrants
A strategic approach – how is the firm positioned for market disruption?
12. CREATING AN ACTION PLAN_____________________________________________
Putting the basics in place
Price systems
Pricing control
Profit analysis tools – scattergrams and waterfalls
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