Mastering Services Pricing Designing pricing that works for you and for your clients

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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