Mastering Services Pricing

About the author
Publisher’s acknowledgements
Preface
Introduction

1  How clients buy services
The data
Rocket Science
Relationship Advice
Routine Work
The five criteria
Pricing Rocket Science
Pricing Relationship Advice
Pricing Routine Work

2  Cost-plus pricing and beyond
Cost-plus pricing
Client-driven pricing
Competition-driven pricing (market-driven)
How service firms compete
What next?
Client messaging
The competitive landscape – what is your market positioning?
New service launches – setting the market price

3  Pitching for work
Pitching for Rocket Science
Pitching for Relationship Advice
The link between chemistry, likeability and price
Pitching for Routine Work
Retenders
Post-pitch negotiation on price
The tactics of pitching4  Negotiating price
Price and scope are linked
A small reduction
Major reductions
Clients on historically low rates
Dealing with procurement
Just how strong is your relationship?
Negotiating with procurement
Negotiations and Routine Work

5 The pricing lever
Strategy one – increase your prices
Strategy two – work harder
Strategy three – work smarter not harder
Strategy four – cut overheads, reduce the cost base
Strategy five – cut prices, win more work

6 Alternative fees
Option 1 – fixed fees
Option 2 – project-based costing
Option 3 – blended rates
Option 4 – capped fees
Option 5 – annual retainers
Option 6 – contingent fees
Option 7 – success-based fees
Option 8 – discounted hourly rates
The confident partner

7  Pricing tactics
1. Free not cheap
2. Show the price of added value
3. Give the client options
4. Dealing with lowballing
5. Supporting a client in distress
6. The ultimatum
7. Pedestal selling
8. Discounts for volume
9. Annual price rises
10. Having lower cost options
11. Team structure
12. Be in the pack
13. Market intelligence
14. Trophy clients
15. Negotiate with the toughest clients at the right time
16. Differential partner rates
17. Deliver what was actually paid for
18. Show the discount
19. Lower rate does not equal less spend
20. Act for clients that you like (not the bullies)
From tactics to strategy

8  Drivers of value
Typical starting point
Creating different services – part 1: best ever service
Creating different services – part 2: lowest cost
Creating different versions
Price discrimination
Creating different services – statistics and data
Using existing clients as your differentiator
Moving from costs incurred to value delivered
The perfect solution – start with value
Value pricing by work type
The big question: does value pricing mean the end of charging by time?

9  Learning from industry
Pricing across the lifetime of a product
Penetration pricing
Learning from airlines
Add-ons and after care – double the profit
Unexpected extra costs and penalties
Insurers and the pool
Price matching promises to (accidentally) stop competition
Power by the hour – changing the supply dynamic

10  Saving clients money
The pricing dilemma
KPI exercise
Spend reduction projects
Targeted reductions
Consolidation and its dangers
Creating and sharing savings
Hidden resources and how to use them
Rocket Science
Routine Work
When to say no
Clients who always want to save money
Finally – when did you last save a client money?

11  Pricing controls and capabilities
Building pricing controls
Utilisation
The rate card
Write-offs
Analysis of current clients
Building pricing capabilities
The role of pricing in the organisation
Defining pricing capability
Pricing needs a home
Summary